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The global liquefied natural gas market could be even tighter next year compared to already tight LNG markets in 2022, Fatih Birol, Executive Director of the International Energy Agency (IEA), said on Thursday.
Europe, looking to slash its dependence on Russian pipeline gas, has significantly boosted imports of LNG in recent months. In June, for the first time ever, the European Union imported more LNG from the United States than gas via pipeline from Russia, after Moscow slashed supply to Europe.
So far this year, Europe has seen a 60% spike in LNG imports, the IEA’s Birol said at the LNG Producer-Consumer Conference in Japan, as carried by Reuters.
With no supply from Russia via the key link Nord Stream to Germany, now indefinitely – and possibly forever – closed, the EU is turning to North Africa and Norway for additional pipeline supply and to LNG, mostly from flexible-destination U.S. supply, to replace Russian gas.
“Last year, Russian gas accounted for 40% of our gas imports. Today it’s down to 9% pipeline gas,” European Commission President Ursula von der Leyen said in the 2022 State of the Union speech earlier this month.
Europe will need a lot more LNG supply in the coming years, too, which puts it in competition with Asia and tightens the global market.
Reduced energy supply due to the sanctions against Russia and Moscow shutting down key pipeline gas export routes will leave Europe scrambling for oil and gas well after the coming winter as the current crisis is not “a one winter story,” according to analysts at consultant Energy Aspects.
“This is not a one winter story, let’s just make it very, very clear,” Amrita Sen, founder and director of research at Energy Aspects, told Bloomberg television in an interview last week.
Without Russian pipeline gas, Europe’s demand for LNG is projected to jump by 150% from 2021-2040 as overall natural gas demand declines more slowly than domestic production and non-Russian pipeline imports, according to a study by Rystad Energy, commissioned by the American Petroleum Institute (API) and the International Association of Oil and Gas Producers (IOGP). LNG is projected to meet around 50% of Europe’s natural gas demand through 2030. After 2030, LNG will meet an even greater share, reaching about 75% of demand by 2040, according to the analysis.
By Michael Kern for Oilprice.com
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Michael Kern is a newswriter and editor at Safehaven.com and Oilprice.com,