While Europe is set to import an increasing amount of liquefied natural gas (LNG) as part of its efforts to reduce reliance on Russian pipeline gas, the European market is struggling to secure enough floating storage and regasification units (FSRUs) and advance LNG import facilities construction.
“Europe is screaming for FSRUs to get energy in, whatever it costs,” Yngvil Asheim, managing director of Norway-based FSRU owner BW LNG, told the Financial Times.
Last week, the European Union and the United States announced a deal for more U.S. liquefied natural gas exports to the EU as the latter seeks to replace Russian supplies, on which it is dependent. According to the terms of the deal, the United States will deliver at least 15 billion cubic meters of liquefied natural gas to the EU this year more than previously planned, the White House said in a fact sheet.
Europe–unlike the United States–cannot afford to go without Russian gas currently, so the European partners have been reluctant to slap sanctions or impose an embargo of imports of oil and gas from Russia.
The Russian war in Ukraine made Europe rethink its energy strategy, and the European Union has now drafted plans to cut EU demand for Russian gas by two-thirds before the end of 2022 and completely by 2030, to replenish gas stocks for winter and ensure the provision of affordable, secure, and sustainable energy.
However, FSRUs and LNG import terminals currently operating in Europe are not enough, according to analysts who spoke to FT. It will take years for terminals to be built.
Germany, for example, doesn’t have any LNG import terminals now, but in the wake of the Russian war in Ukraine, Europe’s biggest economy announced it was changing course “in order to eliminate our dependence on imports from individual energy suppliers,” as German Chancellor Olaf Scholz said. Germany will build two LNG import facilities, at Brunsbuettel and Wilhelmshaven. Last week, German LNG Terminal and Shell signed an agreement under which Shell will make a long-term booking of a substantial part of the Brunsbuettel terminal’s capacity for the import of LNG.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.