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US LNG And EU Import Capacity Imparity

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Victor Tenev's picture
LNG Business analyst, ROITI limited

Being a petroleum economist and a former chief accountant, I am fully determined to set and follow the highest standards along with the in-depth knowledge of finance and the solid academic...

  • Member since 2023
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  • Jan 12, 2023
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Just barely into the new year and the LNG industry found itself in the spotlight again, with many unprecedented new events and shifts to evolve. Notwithstanding that LNG is slated to be more global than ever, we just cannot not give US LNG exporters credit for the boost in their LNG supplies to EU, amplified by the strong geo-political headwinds and macroeconomic impacts.

 

 

 


After US surpassed Qatar and Australia as the most prolific LNG exporter for the last three months, @Daniel Yergin states, “Last month, for the first time ever, U.S. exports of liquefied natural gas to Europe exceeded Russia’s pipeline deliveries.” After acknowledging the scale of the US LNG potential, we can’t lose sight of the imparity between the LNG supply and regasification capacity of EU. By carefully weighing up the EU regasification capabilities(with no large spare capacity) against the new LNG additions, one would very easily have the impression that under the scenario of more intense supplies, the former would come up short on absorbing any significant extra supply. To exemplify more, “Western Europe’s regasification capacity was operating at 100% last month, and spare capacity to accommodate a future increase in import volumes is minimal.”, @Rystad Energy said, adding that “LNG imports into Western Europe totalled 294 million cubic metres per day in January 2022, a new all-time high utilising 100% of the region’s regasification capacity.”

Just as @Irina Slav claimed “Storage, however, is filling up, which means that soon, LNG shipments from the United States might start to decline.”

Somehow, getting into the details indicates that EU total regasification capacity reaches 220BCM., whereas the average regas rate is lying somewhere between 550 and 630 mcm/day, also not to forget the pipeline connections with the Terminals and the intrinsic limitations of the LNG storage facilities (roughly 100 - 120 000m3 per storage tank), all this getting us to the conclusion that any additional significant import of LNG could not be handled by the EU Import facilities, even if EU LNG Terminal Operators jack up their regasification to their nameplate maximum utilization rate.

In consideration of the foregoing, another serious topic is tabled for discussion, e.g., the falling and insufficient investments in low-carbon fuel infrastructure in EU, exacerbated by the engaged transition in the energy sector, which only makes the energy security more vulnerable and structurally undersupplied, whilst everybody else is competing to cast the first stone at the hydrocarbons. Chasing too much the future would drive us away from the present-day issues, such as the energy conundrum we live in and opposing the energy integrity to the environmental sustainability.

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