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    Europe today, Asia tomorrow – the future of LNG demand [LNG2023]


Europe got lucky with warm weather last year and is confident it will have enough gas this coming winter, but beyond the short term, the outlook for LNG demand is “very challenging.”

by: Ross McCracken

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Europe today, Asia tomorrow – the future of LNG demand [LNG2023]

“We got lucky, it was a very warm winter,” said Mike Lewis, CEO of German utility Uniper, a company which suffered more than most from the loss of Russian pipeline gas supplies following the invasion of Ukraine in late February 2022. 

Speaking at an opening session of LNG2023 in Vancouver, Lewis said the gas crisis which ensued highlighted not just the importance of natural gas in terms of heat and energy supply in Europe, but its centrality to the broader European economy.


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Lewis said there would be no turning back. Referring to Europe’s reliance on Russian pipeline gas, he commented: “We had a single point of failure, and it failed”. Key to addressing that single point of failure was LNG, which “showed how quickly we could move away from pipeline gas” and revealed “enormous flexibility in the LNG supply chain,” he said.

He expects about 45bn m3 of regasification capacity to come onstream in Germany alone in the next four-five years. He also expects the closure of coal plants to maintain the necessity of LNG imports as Europe seeks to reduce its greenhouse gas emissions. He said Uniper would continue to seek diversification and flexibility in supplies, and that there was reasonable visibility over the next decade in terms of European gas demand. However, beyond that, the situation is “very, very challenging.”

Hoping for warm winters is no energy policy

Speaking at the same session, Octavio Simoes, CEO of US LNG developer Tellurian, said the short-term need for LNG in Europe remains acute. He warned that Europe still faces a challenge in securing gas supply over the next four years, owing to the relative lack of new supply coming to the market until the mid- to late-2020s. “The problem for Europe will not be over for four years. We can’t just keep praying for warm winters. That is not an energy policy,” he said.

Simoes said a key problem was a lack of investment in oil and gas supply which predated the Ukraine crisis and could be traced back to 2014. He said for the last three years, European banks have been unwilling to invest in fossil fuels, but that changed a year ago when the energy crisis became serious. The lack of investment means new supply has not kept up with demand and the natural decline from existing projects, leading to shortages.

Long-term LNG demand more certain in Asia

Yet the need to reconcile the short-term nature of Europe’s demand for LNG and the longer-term implication of the energy transition remains a brake on new LNG investment. 

According to Lewis, this can be resolved by providing European buyers flexibility in destination, tenure and pricing so that LNG can later be redirected to Asia to displace the region’s massive coal use once gas demand begins to fall in Europe. As such, LNG can play a long-term role first in meeting Europe’s immediate emissions targets and need for energy security, and then longer term as Asia attempts to address its reliance on carbon-heavy coal.

This feature was originally published in the LNG2023 Daily, produced by NGW during the LNG2023 conference in Vancouver July 10-13.