The US has become Europe’s largest supplier of LNG in 2021, accounting for 26% of all LNG imported by European Union member countries (EU-27) and the UK, data from the US Energy Information Administration (EIA) revealed on Tuesday.
Almost 70% of Europe’s supply of liquefied natural gas (LNG) originated in the US, Qatar, and Russia in 2021, data from CEDIGAZ, the International Information Center on Natural Gas, showed.
In January this year, the US supplied more than half of all monthly LNG imports into Europe.
Qatar ranks second after the US with a 24% share of the EU market, and Russia follows with 20%, the EIA said.
According to the US Department of Energy’s LNG Monthly report published in February, January this year saw the most LNG shipped to Europe from the US on a monthly basis to date.
LNG exports from the US to EU-27 and the UK increased from 3.4 billion cubic feet per day (Bcf/d) in November 2021 to 6.5 Bcf/d in January 2022.
The EIA attributed this rise in US LNG exports to both natural gas supply challenges in Europe and the sizable price differences between natural gas produced in the US and the current prices at European trading hubs.
Natural gas supply constraints in Europe and the low storage inventories of the past year also contributed to recent increases in US LNG exports to Europe.
Europe’s natural gas production has been in continuous decline because of production limits on the Groningen field in the Netherlands and declines in the mature fields in the North Sea. To meet demand, Europe’s natural gas imports, particularly from Russia, have expanded in recent years.
-Decline in natural gas pipeline flow from Russia
Natural gas via pipeline from Russia decreased last year via three main pipelines: Kondratki in Poland, Greifswald in Germany and Velke Kapusany in Slovakia.
The combined flow from these three pipelines accounts for 14.3 Bcf/d of import pipeline capacity from Russia to Europe.
Pipeline receipts from Russia at these three main entry points averaged 10.7 Bcf/d in 2021, compared with 11.8 Bcf/d in 2020 and 14.1 Bcf/d in 2019, according to data by Refinitiv Eikon, one of the world’s largest providers of financial markets data for commodities trading.
However, more natural gas was delivered by pipeline from Norway last year. In 2019 and in 2020, supplies from the country averaged around 10.4 Bcf/d and increased to 11.1 Bcf/d in 2021, but this was not enough to offset reduced pipeline receipts from Russia.
Supply challenges in the European market have led to rising regional prices for natural gas. The natural gas spot price at the Title Transfer Facility (TTF) in the Netherlands—the most liquid virtual natural gas hub in Europe—has been trading at all-time high levels.
The TTF price averaged $28.52 per million British thermal units (MMBtu) from September 2021 through the first week of February 2022.
The TTF price peaked at $60.20/MMBtu on Dec. 21, 2021. Prior to this sharp price increase, the TTF price had averaged $9.28/MMBtu from January through August 2021, $3.28/MMBtu during 2020, $4.45/MMBtu during 2019, and $6.45/MMBtu from 2014 through 2018.
Historically, spot natural gas in Europe has traded at prices lower than LNG spot prices in Asia. In recent months, however, natural gas prices in Europe have closely tracked those in Asia.
On some days, the natural gas price in Europe has exceeded the LNG price in Asia, attracting a higher volume of flexible LNG supplies to Europe. LNG imports to Europe increased in December 2021 and January 2022, averaging 10.8 Bcf/d and 14.9 Bcf/d, respectively, partly in response to the price at TTF rising above LNG spot prices in Asia.
By Sibel Morrow