America gears up to become Europe’s top gas supplier, covering 40 percent of the bloc’s future gas demand. Assuming no gas trade between Russia and the EU, up to 136 bcm of US LNG – equivalent to nearly 90 percent of supply from Gazprom in 2021 – could be imported into the EU in 2030, researchers at EWI Cologne find.

Scarcity of LNG on world markets has sent prices soaring and left buyers scrambling for free cargoes. Liquefaction projects in the US, hoped to be sanctioned swiftly, are playing a key role. More than a third of new liquefaction capacities, forecast grow two-thirds over today’s level to 1,050 bcm/y, will likely be built in the United States.

Getting these projects off the ground is deemed a “key prerequisite” for Europe, and especially Germany, covering large parts of their future energy needs with imported American fracking gas. Investors, however, typically want to secure longer-term offtake contracts before committing to building costly LNG export terminals.

A flurry of floating regas and storage (FRSU) capacities are added along the European coast, most of them by 2026. “Floating regas terminal procured in the short term, such as those in Eemshaven, Alexandroupolis and on the German coast, as well as other projects already confirmed, could provide an overall relief,” said Dr. Eren Çam, manager at EWI. “The bottleneck for LNG trade in Europe is hence more on the global liquefaction capacity side than on the EU regas facilities.”
Trend to green fuels lowers gas demand

Though Europe is facing a natural gas supply crunch today, demand is set to fall considerably over the coming years as power generators turn to hydrogen and renewables. Considering the EU’s stringent emission targets and a trend away from fossil fuels is remains questionable if coal and gas retain their current role in the European power generation sector.

Demand reduction through electrification, efficiency gains and burning hydrogen or biomethane for power generation as a natural gas substitute, all eradicates demand.

If gas demand were to decline by 20 percent by 2030 compared to 2021, wholesale prices could fall to 2018-levels – regardless of whether gas trade with Russia is restricted or not. Such a stark drop in prices would render Europe a much less attractive market for US LNG than it is today. On the contrary, if EU gas demand stays at the 2021 level without supplies from Russia, then prices in 2030 will most likely stay at or above current levels.