The American Petroleum Institute (API) and International Association of Oil and Gas Producers (IOGP) have released new analysis from Rystad Energy showing that despite recent progress in shoring up energy security following Russia’s invasion of Ukraine, Europe could still face a looming natural gas supply gap in the coming decades.
“While US LNG helped mitigate a potentially disastrous situation in 2022, there’s more work to be done to help ensure Europe and the global energy market are well-supplied in the long-term,” said API Vice President of Natural Gas Markets, Rob Jennings. “Instead of restrictive policies that ignore the reality that global energy demand is rising, we need policymaking that recognises the vital role US LNG can play in meeting that demand while advancing global climate goals and promoting America’s national security interests.”
As Europe continues to make strides to reduce its reliance on Russian natural gas, US LNG remains the most feasible, reliable and competitive option to meet Europe’s natural gas demand. In 2022, the US surged more than 800 LNG cargoes to Europe – representing approximately two-thirds of its total LNG cargoes, and a 141% increase over the prior year.
Key findings of the study include:
- To meet its commitment to halt all Russian pipeline gas imports by 2027, Europe needs 600 billion m3, or the equivalent of roughly 12 billion ft3/d, of natural gas supplies between 2023 and 2027.
- In the longer term, Europe’s supply gap could be even larger. Between 2028 and 2040, Europe needs nearly 2500 billion m3, or an average of 18 billion ft3/d, of new natural gas supplies. Europe has only contracted 32% of the LNG it could need over the 2028 – 2040 period and has signed less than half the number of long-term contracts that buyers in the Asia Pacific region have signed.
- Long-term contracts for LNG are crucial to helping ensure a stable supply of energy and minimising the risks of demand uncertainty. Thanks to abundant US natural gas, American producers will be critical to supplying growing energy demand.
According to the API, pragmatic policies can help cement the US’ status as a global energy leader. Timeliness and transparency across the permitting and approval process for the full LNG value chain is critical to ensuring the US can deliver affordable energy and strengthen global energy security.
Meeting growing demand while achieving an affordable, reliable and sustainable energy future will require all forms of energy. Natural gas has enabled the US to lead the world in emissions reductions and contributed to CO2 emissions falling near generational lows thanks to coal-to-natural-gas fuel switching in the power sector. As countries dependent on coal look to natural gas to help lower their emissions, abundant and reliable US LNG is key to advancing climate solutions while promoting global energy security.
Click here to view a full copy of the study.
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