Europe on track for record US LNG imports this winter

Europe is on track to import a record volume of liquefied natural gas (LNG) from the US this winter, an analyst close to a US LNG exporter told international news outlet Montel. However, weather conditions and demand from Asia could still have a significant impact.

Last month, we reported that, according to the executive director of the International Energy Agency (IEA), the EU's medium-term outlook for natural gas prices is positive for the first time in a long while. This is also thanks to LNG supplies from the US and Qatar, which are helping to replace the loss of Russian gas supplies. These supplies reached 73 bcm last year and are expected to increase further as new export capacity comes online in the coming years.

According to Montel's source, Europe should remain the main destination for US LNG exports. In this context, it is worth recalling the EU-US trade agreement, which included purchases of US energy commodities worth up to EUR 700 billion. More here.

The EU is expected to be able to absorb most cargoes that do not yet have a designated buyer. This assumption subsequently affects market sentiment and price expectations.

EU gas storage sites are currently 83% full and injections are still continuing. Their filling has also been helped by weaker LNG demand from Asia.

“The fundamental market factors will remain more or less unchanged – storage sites are well filled and offtake is stable,” said Brian Yoon, chief commercial officer at South Korean LNG technology company GasEntec.

Yoon further noted that the main risks for EU gas prices in the coming winter season are weather developments, demand in the Asia-Pacific region and unplanned outages. Over the medium term, he sees a significant increase in export capacity, which could be a game changer. We wrote about the expected expansion here.

“Overall, however, we are entering an unprecedented period of long-term LNG infrastructure development that will spur the emergence of new LNG markets and shipping routes in the decades ahead,” he said.