EU bid to replace Russian gas
July 5, 2022 - Europe plans to replace Russian energy by increasing purchases of liquefied natural gas (LNG) from the U.S., Qatar and Australia. However, LNG terminals have limited capacity to store extra supply.
Global LNG production is forecast to reach 455 million tonnes in 2022, according to figures from Bloomberg Intelligence. Roughly 70 per cent of cargoes go to buyers with long-term contracts, with the rest selling on the global spot market to the highest bidder. In theory, the market has sufficient LNG to replace the EU’s gas imports from Russia. However, while Europe’s 22 LNG terminals can import around 151 million tonnes per annum (Mtpa), most are operating close to total capacity -- they only have the spare ability to take in about 65 Mtpa.
Spain has the EU’s most extensive capacity, with six terminals totalling 44 Mtpa, while Germany has none, according to data and analytics firm Kpler.
“The problem with Spain is that it has limited pipeline connections with the rest of Europe with only one pipeline that could take gas from Spain to France, and so capacity is restricted somewhat,” Laura Page, senior LNG analyst at Kpler, told Reuters.
Germany, the biggest buyer of Russian gas in the EU -- relying on Moscow for 46 per cent of its consumption -- plans to hire ship-borne floating terminals.
According to a recent research briefing for Britain’s House of Commons, around a dozen EU countries rely heavily on Russian gas imports. Apart from Germany, Austria and Bulgaria rely on Russia for about 80 per cent of their domestic consumption. Reliance rises towards 90 per cent in Slovakia and Czechia and hits 100 per cent in Hungary and Latvia.