ACER’s monitoring shows EU LNG imports might be near its peak

Today's ACER European LNG Market Monitoring Report (MMR) analyses global and EU market developments and recommends further actions to improve transparency, competition and flexibility in European LNG terminals.

What 2023 trends did ACER’s monitoring and data insights find?

• During the energy crisis, EU successfully secured gas supply and diversified gas imports away from Russia, with LNG playing a key role in this shift.
• Since 2022, over 50 bcm of new LNG regasification infrastructure in the EU has eased supply congestion and helped narrow the price gap between European gas hubs and LNG spot prices.
• EU is the biggest LNG import market (with 134 bcm of LNG imports in 2023), and the US the largest exporter (119 bcm in 2023).
• In 2023, Europe imported 18 bcm of Russian LNG, mostly from long-term contracts signed before 2022. At least 1 bcm, but possibly more, was re-exported to Asian markets through LNG reloads.
• EU LNG demand is likely to reach its peak in 2024. This is due to reductions in structural gas demand driven by the EU’s ambitious decarbonisation goals.
• 19 global liquefaction projects under construction are set to boost LNG production by circa 200 million tonnes by 2030, equivalent to half of the current yearly trade.
• Around 75% of the LNG import capacity added in the EU since 2022 are Floating Storage and Regasification Units (FSRUs). This allows for the potential repurposing or relocation of these floating infrastructure should their utilisation significantly decline.
• The targeted gas demand cut scenario of REPowerEU (if it materialises by 2030) could shift EU's reliance on the spot LNG market, turning a 49 bcm ‘under-contracted’ status in 2023 to an ‘over-contracted’ position of 30 to 40 bcm between 2027-2030. Under-contracted means insufficient long-term contractual commitments increasing buyers’ reliance on the more volatile spot market. Over-contracted means the long-term contracts exceed the demand. Nonetheless, the surplus in long-term commitments should not pose a burden thanks to the flexibility of free-on-board (FOB) contracts, which enable surplus LNG to be sold on the spot market or redirected elsewhere.
• Contrary to the general belief, the EU remains more dependent on long-term than on spot LNG contracts (2 thirds vs 1 third). TTF serves as the predominant indexation term for EU spot contracts (64%), but not for long-term ones (where Henry-hub and Brent indexations are dominant).

Read more about the report.

Explore other MMR publications.

What’s next?

Join our webinar to learn more about the evolving role of LNG in the European energy market.

When? 30 April 2024, 10:00 to 11:00 CET (online). Register for free here.