Europe’s decreasing gas demand calls into question a scramble to build new LNG import terminals, but leeway remains to increase imports from US as demanded by President Donald Trump.
With European gas demand at an 11-year low, imports of liquefied natural gas (LNG) into the EU fell 16% last year compared to 2023, an evolution of the market that could have significant geopolitical implications.
With pipeline gas from Russia reduced to a trickle since the Kremlin launched its invasion of Ukraine in 2022, the EU has compensated by increasing imports of LNG, especially from the US – but also, controversially, from Russia itself.
Still, the Institute for Energy Economics and Financial Analysis (IEEFA) reported on Tuesday, the EU’s regasification terminals – where shipments of LNG are pumped into the gas pipeline network – were running at an average of just 42% capacity, with many barely used.
Since February 2022, the EU has added import capacity for some 50 billion cubic metres of gas a year, mainly in Germany, the Netherlands, Italy, France and Finland. Based on current plans and demand trends, total capacity could be utilised at just 30% by 2030, the energy transition think tank warned.
“Doubling down on new LNG terminals without taking into account demand trends raises the risk of overinvestment and infrastructure being under-utilised as the energy transition accelerates,” said Ana Maria Jaller-Makarewicz, IEEFA’s lead analyst for European energy.
But the stranded, or underused, assets may not be the most immediate concern in Brussels. The EU continues to import significant amounts of Russian LNG – despite the European Commission’s unofficial target to end all fossil fuel imports by 2027, which is to be the subject of a ‘roadmap’ slated for publication on 26 March.
Before then, vice-president in charge of trade Maroš Šefčovič will travel to Washington on Wednesday (19 February) to try to head off an EU-US trade war, the most senior EU official to be dispatched since Trump’s inauguration.
He is doubtless aware that among the US president’s various ultimatums and threats in recent months was the promise to impose sweeping tariffs on Europe unless it ramps up imports of LNG.
