BAKU, Azerbaijan, September 24. New LNG import terminals in the EU, coupled with higher pipeline flows from the likes of Norway, Azerbaijan and North Africa, are helping to bolster supply, Trend reports via Fitch Solutions.
Additional LNG import terminals will significantly improve security of supply and help to tackle price distortions. For example, the UK – which has greater redundancy built into its regasification capacity (and infrastructural constraints on its ability to funnel excess supplies to mainland Europe) – has seen significantly softer price increases in the wave of the invasion.
While supply ex-Russia is improving, demand is being destroyed.
High gas prices coupled with broader inflationary pressures are
incentivising lower energy consumption and a switch to alternative
fuels, while the bloc is actively encouraging its consumers to
conserve their gas usage where possible. This has allowed Europe to
raise storage levels, building up its buffers ahead of the peak
demand season over winter. As of September 19,
storage had increased to 86% of capacity, marginally above the
five-year seasonal average of 85%.
Russia is still exporting significant quantities of LNG to Europe. In fact, exports have increased from an average of around 39Mcm/d in 2021, to around 53Mcm/d in the eight months to August this year. However, LNG is far more fungible than pipeline gas and the EU is actively seeking alternative long-term suppliers. The bloc is also significantly increasing its LNG import capacity, with more than 20 new terminals slated to come online over the coming years in markets including Germany, Greece, the Netherlands, Cyprus, Estonia, Finland, France and Poland.
