The USA will probably be the most important source of supply for liquefied natural gas (LNG) in Germany and Europe in the future. This is the result of a study by the Energy Economics Institute at the University of Cologne (EWI) on behalf of the industry association Zukunft Gas.
According to this, natural gas from Russia will no longer be available in the near future or only with restrictions, which is why the currently high gas prices should not reach the level of 2018 again until 2030 – but only if demand is significantly reduced.
In the study “Developments of the global gas markets up to 2030”, the authors describe how the reorientation of the gas supply after Russia’s attack on Ukraine and the resulting supply stops until the end of the decade will appear from their point of view.
Start of construction work for the LNG terminal in Lubmin (Germany)
Challenges by focusing on the USA
Imported natural gas from Russia still had a market share of around 55 percent in Germany in 2021. It was transported through pipelines. The USA now has the greatest potential for deliveries of liquefied natural gas (LNG) via tanker.
However, the strong focus on the USA harbors new challenges: “Looking into the immediate future, Germany is asked not to lose sight of the desired diversification of sources of supply,” demands Timm Kehler, CEO of Zukunft Gas, according to a press release. “Only in this way can the European gas supply become sustainable and secure. The realignment requires a long-term strategy that strengthens diversified LNG procurement.”
In addition, the USA is also expecting long-term signals, according to Kehler. “Only when our US trading partners have a clear picture of future purchase prospects will they make the necessary investments to expand liquefaction capacities.”
Gas production in Norway
LNG demand is increasing significantly
According to the study, the European demand for LNG will increase significantly. In the event that gas trade from Russia came to a permanent standstill, the three remaining pipeline plants from Norway, Azerbaijan and Algeria to the EU would be heavily utilized.
An increase in delivery volumes from these countries is therefore only possible to a limited extent. According to current estimates, Norway could increase its production until 2028, after which production will decline. Imports from the North African exporting countries are expected to decrease because domestic demand there will increase in the course of the expected economic growth.
An LNG tanker at the terminal in Rotterdam
EU becomes the most important gas sales market for the USA
In all scenarios examined, US imports will increase significantly compared to 2021. According to the study, if no gas is traded between Russia and the EU, they will account for around 40 percent of total EU imports. This would make the EU, along with Asia, one of the most important sales markets for natural gas from the USA.
On the other hand, growth in volumes coming from Qatar is limited. Additional imports from Australia or Canada would probably not be significant for the European market either, as these exporters will primarily serve the Asian market. However, the additional quantities could help prevent shortages on world markets. Lower demand would also have a price-dampening effect. This could be achieved, for example, through electrification, efficiency gains and the production of biomethane as a substitute for natural gas.
With a view to the current price situation, Timm Kehler expects things to ease as early as 2024: “The rapid expansion of the LNG terminals in Europe will eliminate import bottlenecks and align European and Asian prices.”
