EXHIBITION & CONFERENCE

SINGAPORE EXPO | SINGAPORE | 5-8 SEPTEMBER 2023

Europe’s scramble to secure – and receive – LNG supplies

Europe’s scramble to secure – and receive – LNG supplies

by Sarah Louise Howell, Vice President, of Gastech

 

Europe’s pledge to rapidly reduce and ultimately eliminate its reliance on Russian energy imports by the end of the decade – and likely sooner – marks a generational change in the continent’s energy landscape. Alongside energy efficiency savings and further ramping up of renewables, diversity of supply is now firmly at the forefront of policymakers’ minds.

With any new natural gas projects years away from coming on stream, Europe must look further afield to the global market of liquefied natural gas (LNG) for alternative supplies. Much of that market is tied up in long-term supply contracts, presenting Europe with significant, immediate difficulties in bridging its gas shortfall.

The United States has stepped in to help alleviate some of the pressure by directing an additional 15 billion cubic metres of LNG to the continent by the end of the year. But the emergency supplies, while much needed, account for less than 10% of Europe’s total annual reliance on Russian gas. Europe must quickly look to other major LNG exporters – such as Qatar, which plans to double LNG production by 2025 – to draw down its dependence on piped Russian gas.

Increasingly, however, European policymakers are wrestling with another policy headache – that of its own capacity to import LNG.

After being cooled to liquid form for easier transportation and storage, natural gas in LNG shipments must undergo a process of regasification to enter domestic pipeline systems. But Europe is chronically short of the LNG terminals required to meet the sudden surge in demand. Germany, in many ways the standard-bearer of Europe’s dramatic 180-degree turn away from piped Russian gas, has no regasification terminals.

New import terminals will take years to build and at no small cost. As a result, European policymakers are eyeing up floating storage and regasification units (FSRU) to receive LNG offshore and turn it into gas for onshore networks. According to the FT, these can be set up in under a year.

That, however, is only if you can find them. Only 33 of these vessels exist worldwide and supply is not expected to improve soon. France is reportedly in talks with TotalEnergies to install a FSRU in Le Havre. Other European gas consumers will be competing with each other to follow suit. The number of FSRU buyers will significantly outstrip supply.

How Europe can solve its LNG challenges in the wake of Russia’s invasion of Ukraine – both in terms of securing additional supplies and boosting its import capacity for the fuel – will be a key theme of Gastech 2022. As industry leaders, policymakers and investors gather in Milan, we may get used to hearing a lot more about floating terminals to unlock Europe’s supply crunch.

 

Don’t miss your opportunity to join the debate shaping Europe’s energy future at Gastech’s 50th anniversary edition. To find out more about the conference, visit our website at: https://www.gastechevent.com/