Bloomberg: Europe could end up with a surplus of LNG import terminals

Europe is now trying to offset disruptions to Russian supplies by importing liquefied natural gas (LNG). However, Bloomberg reports that plans to build new LNG import terminals in Europe may have already gone too far. Terminal capacity could significantly exceed demand after 2030 as European countries increasingly turn to renewable energy. This could leave billions of euros’ worth of infrastructure redundant, Bloomberg writes.

According to the Institute for Energy Economics and Financial Analysis (IEEFA), Europe’s LNG import capacity will increase by around 50 percent this decade. Some scenarios suggest, however, that European demand for LNG will not grow, or may even decline. By the end of 2030, the European Union could have up to 250 billion cubic metres a year of unused LNG import capacity, according to IEEFA. That is equivalent to more than half of the EU’s total gas demand in 2021.

Europe made it through the past winter without significant disruptions to gas supplies, thanks to relatively mild weather, lower energy consumption and LNG imports. As a result, European gas storage facilities are now fuller than usual for this time of year. However, record volumes of LNG are still heading to Europe amid concerns about next winter. On some days, terminal capacity is fully booked and LNG tankers have to wait idle at sea to unload, Bloomberg reports.

Europe therefore needs new terminals to meet current demand for LNG. However, there are concerns about insufficient demand over the longer term. One scenario from the International Energy Agency (IEA) suggests that EU gas consumption could fall by as much as 45 percent by 2030 as the bloc shifts to renewable energy.

Esther Ang of gas trading company MET International said, however, that Europe would still need LNG after 2030. The EU also sees additional LNG import capacity as insurance to ensure security of supply, Bloomberg reports. It also notes that floating LNG terminals can be used as tankers if needed, or moved to other locations, such as Asia. Some terminals can also be adapted to handle other commodities, such as hydrogen or ammonia.

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