Loading...
Loading...
us-pause-on-lng-exports-wont-impact-europe-and-asia-markets
us-pause-on-lng-exports-wont-impact-europe-and-asia-markets

US pause on LNG exports won’t impact Europe and Asia markets

The Biden administration’s decision to halt liquefied natural gas (LNG) export permitting sparked uproar among industry players last month, with Venture Global LNG labelling the move as sending a ‘devastating signal’ to US allies.

However, the Institute for Energy Economics and Financial Analysis (IEEFA) says that these fears ignore basic trends in global gas markets. As the role for gas shrinks in Europe amidst a rapidly accelerating transition to clean energy, the demand for US LNG has continued to fall in Asian markets.

It was discovered that major buyers of US LNG are not European or Asian consumers, but oil and gas traders aiming to profit from resale. The US pause aims to control LNG industry growth, not threaten global energy security, said IEEFA.

The need for energy security was highlighted after Russia’s invasion of Ukraine in February 2022, causing European countries to scramble for LNG to make up for lost supply.

Reacting to the move away from Russian gas, the US doubled exports to Europe in each of the last two years compared to 2021.

As gas prices increased alongside deployment of renewables, EU gas demand dropped 14% in 2022 and 7.4% in 2023 while gas storage levels ‘exceeded targets’.

“As these trends continue, EU gas demand could fall an additional 16% by 2030. IEEFA expects the continent’s LNG demand to peak in 2025 – far earlier than US export projects affected by the pause would enter the market,” said IEEFA.

Historically the world’s largest LNG buyer, Japan’s imports peaked in 2014 and dropped 8% in 2023. Demand could fall nearly a third by 2030 as Japanese companies report an excess in supply.

The largest buyer of US LNG in recent years, South Korea’s demand for gas dropped 4% in 2024 and could plummet 20% by the mid-2030s as renewables continue to scale-up deployment.

In China and Southeast Asia the higher availability of cheaper natural gas sources has seen LNG demand centres shift to more price-sensitive markets.

Around 70% of the Southeast Asian market was supplied by Australia, Qatar and Malaysia while Qatar supplied over 60% of the total imports into South Asia.

“As key markets in Europe and Asia cut their dependence on LNG, traders are soaking up an increasing share of US volumes, betting on the long-term growth of the global market,” said IEEFA.

The Biden administration’s decision is not expected to impact five ongoing US liquefaction projects set to almost double export capacity. Notably, major buyers aren’t European or Asian end users but large ‘portfolio players’ such as ExxonMobil and Shell eyeing resale gains.

“The pause on new US export permits is about reining in how much fossil fuel companies are allowed to gamble.”


About the author
Related Posts
No comments yet
Get involved
You are posting as , please view our terms and conditions before submitting your comment.
Loading...
Loading feed...
Please wait...