The EU’s energy security depends on the efficiency of marine LNG terminals

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By Marek Grzybowski

EU countries imported more liquefied gas per month in H1 2024 than in the same months of 2020 and 2021. The energy security of EU economies depends to a large extent on maritime LNG supplies and the efficiency of fixed and floating LNG terminals. Global maritime LNG trade continued to grow last year, impacted by the war in Ukraine and disruptions to pipeline supplies. These forced Europe to diversify supplies and replace reduced gas supplies from Russian pipelines.

Demand from European markets slowed compared to previous years, as reflected in a slight decrease in import volumes of 0.7%. European LNG terminals registered 16.1% fewer supplies. The decrease in volumes should be seen in the context of the EU’s gas consumption reduction plan, in which EU countries committed to reducing gas consumption by at least 15%. The plan initially covered the period from August 1, 2022 to March 31, 2023, but was extended to March 31, 2024.
It is significant that EU economies paid significantly less for seaborne supplies than during the panic in 2022. – In 2023, the value of imported natural gas fell by 52.2% compared to 2022 – reported Eurostat. The fall in natural gas prices came after a rise in prices in 2022, when an average price increase of 200.4% was recorded.

The world needs gas
Although global LNG supplies rose 1.7% year-on-year to 409.9 million tonnes in the first 12 months of 2023, based on Refinitiv ship tracking data, Banchero Costa Research reports. This followed an earlier 4.7% year-on-year increase in volumes in 2022 and a 7.3% year-on-year increase in 2021, the positive trend continued in January-June 2024, with deliveries rising 1.3% year-on-year to 206 million tonnes in H1 2024.
The largest LNG exporter today is the United States, which accounted for 21.2% of deliveries in H1 2024. Other beneficiaries of the gas market turmoil include Australia with 19.9% ​​and Qatar with 18.8% market share. In H1 2024, the United States introduced 43.6 million tons of LNG to the global market, up 1.8% year-on-year compared to 42.8 million tons loaded onto LNG carriers in H1 2023. Australia loaded 41 million tons of LNG at its terminals in January-June 2024, up 0.8% year-on-year compared to H1 2023. Qatar exported 38.7 million tons in January-June 2024, up 2.6% year-on-year. Russia exported 15.9 million tons of LNG by ships in H1 2024, up 6.1% year-on-year. However, this was below the 17 million tonnes exported in the first half of 2022 – remind analysts from Banchero Costa Research.

The European Union maintains its position as the world’s largest LNG importer. In H1 2024, the EU imported 45.4 million tons of LNG by sea. This was a 22% share of the global LNG import market. Despite the fact that the demand of EU economies for gas imported by sea decreased by 12.2% y/y. The PRC economy imported 39.1 million tons of LNG in H1 2024. This was 17.5% more y/y, because in H1 2023, China received 33.3 million tons of gas in LNG terminals. Japan imported 33.2 million tons in H1 2024, more by 1.3% y/y. South Korea needed 24.2 million tons of gas in H1 2024. This was an increase in imports by 1.7% y/y. India imported 13 million tons in H1 2024. Terminals in India worked at full capacity in H1 2024, as +31.7% more gas was imported by sea than in H1 2023. Great Britain imported only 4.2 million tons of LNG to its market in H1 2024. This is the effect of a massive reduction in demand by 60.6% y/y.

EU a leading player

The European Union (27) is currently the world’s dominant player and importer of LNG by sea. This is the result of the fact that the largest increase in demand in the last few years has occurred in Europe. The effect of the war in Ukraine and the lack of planned Russian deliveries via pipelines running through the Baltic Sea are clearly visible here. In the period January-December 2022, the European Union imported 100.8 million tonnes of LNG. This was an increase in sea deliveries by 68.9% y/y compared to 59.7 million tonnes imported in 2021.
The largest deliveries, 26.4 million tonnes, were imported to France, which already has a strong position on the energy market thanks to nuclear power. 22.8 million tonnes of gas arrived in Spain by LNG tankers, and 12.8 million tonnes to the Netherlands. 11.3 million tons of gas were imported through terminals located in Belgium, and 10.7 million tons reached Italy. 4.5 million tons of gas were imported to Portugal, and 4.4 million tons were unloaded at the gas port in Świnoujście.

– In the second quarter of 2024, the EU imported energy products worth EUR 94.9 billion, which is a total of 177.9 million tons. Compared to the same quarter of 2023, imports decreased both in value (-10.7%) and net mass (-9.7%) – informs Eurostat in its latest report. This had a significant impact on the work and activity of fuel and gas terminals.

EU energy imports fall
Eurostat reports that “the value of imported gaseous natural gas fell by 31.4% in the second quarter of 2024 compared to the same quarter of 2023. However, supplies of this raw material decreased by only 9.5%. A similar trend was observed in the case of liquefied gas, with imports showing a very significant decrease in value (-41.2%) and volume (-20.2%)”.

Analysing all imports of oil and gas products, it is noted that “Imports of petroleum products recorded minor fluctuations”. The monthly average value of imported petroleum oils was 1.6% lower than the monthly average in 2023, while the volume decreased by 3.6%. Large price drops were recorded in the case of liquefied natural gas. LNG buyers paid 42.8% less. This may be the effect of the ongoing reduction in demand. In Q2, there was a 15.3% decrease in the volume of LNG supplies to EU countries, and in the case of natural gas in a gaseous state, a 37% decrease in value and a 4.8% decrease in volume. In Q2 2024, most of the EU’s crude oil imports came from the United States (15.1%), Norway (14.1%) and Kazakhstan (11.7%) – Eurostat calculated. Most of the natural gas in a gaseous state came from Norway (43.5%). Algeria came in second with 21.6%, ahead of Russia with 15.5%. The United States supplied almost half of the imported liquefied natural gas (46.0%), ahead of Russia (16.8%) and Qatar (11.9%).