The EU isn’t yet equipped to receive enough LNG to replace Russian gas entirely - Bloomberg
The EU isn’t yet equipped to receive enough LNG to replace Russian gas entirely and will need to outbid rival buyers. And because the world’s supply of LNG can’t expand quickly, routing more of it to Europe leaves other would-be buyers wanting, according to Bloomberg.
Global LNG production — led by the US, Qatar and Australia — is expected to total 455 million tons in 2022, figures from Bloomberg Intelligence show. Roughly 70% of cargoes on the water are reserved for customers holding long-term contracts, while the remaining 30% are sold on the global spot market. That means roughly 136 million tons of LNG this year will go to the highest bidder. In theory, there’s enough LNG on the market to cover the EU’s gas imports from Russia, the equivalent of 118 million tons of LNG. However, the two dozen import terminals in Europe have spare capacity to take in only about half that.
Germany, the biggest buyer of Russian gas in the EU, intends to build several LNG import facilities, its first, despite its goal of abandoning fossil-fueled power by 2035. A number of countries, including Germany, announced plans to hire ship-borne floating terminals that can be put into operation in a matter of months rather than years. To move gas from coastal import terminals to demand centers elsewhere, new pipelines are being laid and plans have been launched to reverse the flow in an existing one built to bring gas from Azerbaijan to Italy.
For the immediate future, the world is limited to about four dozen LNG plants around the world, along with some 600 specialized tankers that can ferry cargoes. A fire at a Texas LNG plant in June temporarily knocked out almost a fifth of US exports.
