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Thursday, July 18, 2024

Europe’s Gas Consumption Hits 10-Year Low Amid Rising LNG Imports

Europe witnesses a decade-low in gas consumption while boosting LNG imports and diversifying energy sources, post-Russia-Ukraine war, as per IEEFA reports.

Europe’s gas consumption in 2023 fell to its lowest level in 10 years as countries scaled up efficiency measures and renewables deployment, according to the Institute for Energy Economics and Financial Analysis (IEEFA) on Wednesday.

In the two years since the start of the Russia-Ukraine war, natural gas demand has declined by 20% across Europe.

The latest version of IEEFA’s European LNG Tracker reveals that Germany, Italy and the UK are the drivers of the fall in natural gas demand and that the continent’s LNG consumption is forecast to peak in 2025.

With markets rapidly curbing their reliance on Russian gas in the wake of the invasion, IEEFA forecast that LNG imports would rise in 2023 to make up for the shortfall. However, Europe’s LNG demand was in fact flat year over year.

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Despite this, countries continue to construct new LNG infrastructure. Eight import terminals have come online since February 2022, and a further 13 projects are expected to be operational by 2030. This means that the combined capacity of Europe’s LNG terminals could be three times higher than the expected LNG demand by the end of the decade.

‘Two years on from Russia’s invasion of Ukraine, Europe’s energy system is more diversified and resilient. The crisis has been controlled to an extent, efficiency measures have been scaled up, and renewables and heat pump installations have accelerated. This has set up the continent to continue reducing gas demand,’ said Ana Maria Jaller-Makarewicz, lead energy analyst, Europe, at IEEFA.

“Having experienced the dangers of risking security of energy supply by depending too much on one source, Europe must learn from its past mistakes and avoid becoming over-reliant on the US, which provided nearly half of its LNG imports last year.”

Russian LNG Imports Rise

Europe’s success in slashing Russian piped gas imports contrasts with its rising shipments of LNG from the country. Between 2021 and 2023, Russian LNG supplies to Europe increased by 11%, while shipments to Spain doubled and shipments to Belgium more than tripled. Furthermore, Türkiye and Greece started importing Russian LNG in 2022.

Spain, France and Belgium received 80% of Europe’s Russian LNG imports last year.

The European terminals that imported the most Russian LNG between 2021 and 2023 were Zeebrugge in Belgium, Montoir-de-Bretagne in France, Bilbao in Spain, Gate in the Netherlands, Dunkerque in France, and Mugardos in Spain.