European competitiveness threatened by continued imports of volatile LNG
Europe is increasingly relying on imports of LNG as it seeks to shift away from a reliance on Russian fossil…
Following the re-election of Donald Trump as US President, European Commission President Ursula von der Leyen has suggested that the EU could replace imports of liquified natural gas (LNG) from Russia with additional purchases from the US. This statement has been widely interpreted as a bargaining chip ahead of likely trade talks between the EU and the new US administration, with the additional purchases potentially used to address the trade deficit and reduce or prevent US tariffs on EU exports. The EU’s new Energy Commissioner has also pledged to develop a plan to end imports of Russian energy, primarily LNG, within his first 100 days in office.
Trump has pledged that he would reverse President Joe Biden’s pause on approvals of new LNG terminals. This would open the door to 12 LNG terminals, with a total capacity of more than 133 bcm, which are awaiting US government approval. This is equivalent to the whole of the EU’s LNG imports in 2023 and would more than double US capacity from 118 bcm currently. [1]All gas volume units in this briefing have been converted into billion cubic metres (bcm) for consistency, using conversion factors from the BP Statistical Review of Energy.
The Biden administration’s pause on approvals for new LNG terminals only affected those that had not yet received permission from the government – it did not affect terminals and LNG expansion projects that had already been approved.
Data from the US Energy Information Administration (EIA) released in January 2025 reveals that at least 73 bcm of LNG capacity is under construction. This is over four times more than the estimated 17.1 bcm of Russian LNG the EU imported in 2024 and nearly five times the 14.9 bcm imported in 2023, according to data from Rystad Energy.
This analysis clearly shows that the US does not need to approve or build any further LNG terminals for the EU to fully replace its imports of Russian gas.
Two new US LNG projects, Plaquemines LNG and an expansion of the Corpus Christi LNG terminal, have a combined capacity of 27.1 bcm and began operating in December 2024. These two projects alone would deliver 58% more LNG than the EU imported from Russia in 2024.
Some of the LNG production from these terminals will already have been sold under contract to buyers around the world as part of their pre-construction financing. As a result, not all of the LNG would be available for purchase by the EU.
The EU’s total gas demand has already peaked, declining by 13% in 2022 and 7% in 2023. Consumption has continued to fall in 2024. European energy regulators have also forecast that the EU is likely to reach peak demand for imports of LNG in 2024.
This decrease in demand is set to continue. The EU’s demand for gas is set to decline by 29% from 2024 levels by 2030, and 67% by 2040, according to the European Commission’s impact assessment for the proposed target to reduce emissions by 90% by 2040. Similarly, LNG demand would drop from over 120 bcm per year in 2024 to below 60 bcm per year before 2030, if the EU meets the targets under its REPowerEU strategy.
As a result of this declining demand, the EU could soon be facing a gas surplus. Under the EU’s current climate targets, gas supply from currently producing projects in the EU, Norway and Algeria, and existing contracts from elsewhere, is set to exceed demand by 2035. [2]Based on the International Energy Agency’s Announced Pledges Scenario (APS) from the World Energy Outlook 2023. After this point, the EU will need to manage its oversupply through the managed decline of existing production in producer countries and/or not taking gas under their agreed contracts. Any contracts agreed now that run beyond 2035 would be surplus to requirements and would exacerbate the EU’s forecast gas supply glut.
References
↑1 | All gas volume units in this briefing have been converted into billion cubic metres (bcm) for consistency, using conversion factors from the BP Statistical Review of Energy. |
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↑2 | Based on the International Energy Agency’s Announced Pledges Scenario (APS) from the World Energy Outlook 2023. |
Europe is increasingly relying on imports of LNG as it seeks to shift away from a reliance on Russian fossil…
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