Europe will be the largest customer in the global liquefied natural gas market in 2022, with significantly more than rival buyers as the region seeks to replace Russia’s dwindling pipeline gas supply. We are importing quantity.
Over the past few years, the EU has lagged behind Japan and China in importing LNG, but Russia’s weaponization of energy since its invasion of Ukraine has forced the EU to seek alternative fuel supplies.
As Europe needs to import more to fill its storage facilities in 2023, the global LNG market will set to stay tightcould push up prices for gas users around the world.
“As prices rise in Europe, Asia [increase the amount it pays] So we can compete to attract LNG cargoes,” said Olumide Ajayi, Senior LNG Analyst at Refinitiv. “Europe has become a premium market.”
EU countries will import 101 million tonnes of LNG in 2022, 58% more than the previous year, according to Refinitiv data. The block accounted for 24% of his LNG imports globally during the period.
Namit Sharma, global co-leader for oil and gas at consultancy McKinsey, said declining demand in China has pushed European exploration. Beijing’s strict zero-corona policy has led to an economic slowdown and lower energy demand in 2022.
China’s LNG imports in 2022 totaled 64.5 million tons. In 2021, it was the world’s largest importer with 79 million tonnes. The country also re-exported its surplus LNG to Europe this year to help replenish the block’s gas storage.
Last year’s EU LNG imports were equivalent to 137 billion cubic meters of natural gas, close to about 140 billion cm of pipeline gas received from Russia in 2021. However, analysts warn that Europe will need to import more LNG in 2023. The year begins with little Russian pipeline gas as Moscow cuts supplies.
Meanwhile, China has also withdrawn its zero Covid rule. Analysts expect Beijing to deploy huge amounts of renewable energy and build out its domestic gas supply, leading to a resurgence in LNG demand, although not at the same level as in 2021. .
LNG now accounts for about 35% of Europe’s gas supply, up from 20% last year, according to data from the think tank Bruegel.
The International Energy Agency said in December that in a scenario where Russia’s pipeline gas supply falls to zero and China’s LNG imports recover to 2021 levels, the EU faces a potential gas supply-demand gap of 27 billion cm in 2023. I warned you that you might face it.
The IEA says improved energy efficiency and rapid development of renewable energy will help bridge this gap. These shifts are necessary “to meet the conditions of replenishing gas storage levels to 95% and maintaining the security of gas supply until spring 2024 without overburdening the market or European consumers”. will be