Europe is massively importing LNG to ensure its energy supply. It just can’t be any other way, right? ‘We have to be careful not to repeat our mistakes with Russian gas with LNG,’ says energy specialist Moniek de Jong (UGent).
101 billion cubic meters. This is how much liquefied gas (LNG) Europe will have imported in 2022, according to new figures from financial data agency Refinitiv. That is an absolute record. By way of comparison: the entire European Union consumes regarding 400 billion cubic meters of gas every year.
In this way, Europe knocks China off the throne as ‘world champion of LNG’. China and Japan – traditionally the largest importers of liquefied gas worldwide – imported up to 40 percent less LNG than the EU last year. China produced 64 billion cubic meters.
“Europe has become the premium market: Europe is the first market for LNG,” explains Olumide Ajayi, analyst at Refinitiv to the British business newspaper The Financial Times. “It is Europe that sets the price for LNG and Asia must follow suit to attract cargoes.”
Russian gas tap
The European hunger for LNG is easy to explain. Now that Russia has almost completely turned off the gas tap, Europe has to look elsewhere for gas to ensure its energy supply during the winter. LNG is then the first and sometimes the only alternative.
Countries such as the United States and Qatar are ready to supply ailing Europe at the right price. Figures from the US government show that in 2022 its own gas farmers will have earned at least 32 billion euros from transports to Europe.
And it seems that the European LNG trade will only grow. According to the International Energy Agency, in 2023, Europe will still have to look for 27 billion cubic meters of gas to ensure its supply. Perhaps that gap will be (also) closed with LNG.
A number of European member states have now concluded long-term contracts with LNG suppliers on their own. For example, the German government has had a major deal with Qatar since November to ship up to 2 billion cubic meters of liquefied gas annually from 2026.
Terminals are now being built diligently in the German and Dutch ports, among others, to be able to receive all that liquefied gas.
Inclined plane
So long live lng? Not so fast.
In a new research paper, energy specialist Moniek de Jong (UGent) points out that liquefied gas is not the panacea for the European Union. “The EU must proceed with caution when it comes to LNG,” she writes, “as LNG is proving to be a slippery slope”.
On the phone, De Jong clarifies that Europe must be careful not to exchange one ‘evil’ (Russian gas) for another (LNG). Because liquefied gas remains gas, a fossil fuel that we want to get rid of as soon as possible in order to stop global warming.
De Jong says: “Lng has been a good emergency solution for Europe to get through this winter without shortages. But it must not pass. We are now seeing European countries investing massively in liquefied gas. Billions of euros are being released for new contracts and the construction of terminals. We have to ask ourselves if all this is really so smart. Whether we are not getting ourselves into trouble once more.”
There is the fight once morest global warming, which threatens to be delayed. Delay that we can hardly afford. It has been established that the money that goes to the construction of LNG terminals does not go to green measures such as the renovation of buildings. However, the solution to use less gas.
And then there is the geopolitical dimension of LNG. We now know that the Kremlin dares to use its gas supplies for its own political gain. But important LNG suppliers such as Qatar and the United Arab Emirates (UAE) are not afraid of this either.
Qatargate
When Qatar was discredited at the end of December because of the bribery scandal in the European Parliament, a Qatari diplomat was quick to warn Belgium that a (too) strict approach by the country would have consequences for its own LNG supply.
“The German reaction to that scandal struck me. Minister of Economic Affairs Robert Habeck stated that it was not related to the gas trade,” says de Jong. “It was reminiscent of Angela Merkel’s refusal to halt construction of Nord Stream 2 following the poisoning of Russian opposition leader Alexei Navalny.”
But the Americans, we can count on that, right? De Jong insists on a sense of reality. Ultimately, they too act from their own self-interest: financially and geopolitically. For example, the United States recently withdrew its support for a new gas pipeline from Israel to the EU. The official explanation is that the work is moving too slowly. The unofficial one is that the Americans prefer to promote and sell LNG to Europe.
Another problem is that poor countries such as Pakistan, Bangladesh, Sri Lanka, Thailand and India cannot follow in the European ‘scramble’ on liquefied gas – with all the consequences that entails. The countries receive few or no LNG cargoes and are faced with high energy prices, inflation, energy shortages and unrest.
And the scramble on liquefied gas will therefore only pick up in 2023, energy specialists warn. Also because China is now abandoning its strict covid policy and the country is preparing for an economic recovery. A recovery that will be fueled by LNG.
