The Rising Share of LNG in the European Market, a Gradual Shift from the Gaseous State to the Liquid State
Pipeline Technology Journal – 1/2025
C. BOUTAMINE > RANADRILL CONSULTING
Abstract
Europe is still heavily relying on natural gas supplies via pipelines and keeps diversifying its supplies trying to free itself of Russian deliveries. This is a critical concern for Europeans since 2022 when the flow of gas through the Nord Stream pipelines was halted. Another promising project was in place to provide the same volumes, but as a result of the war in Ukraine, this project was not developed further.
Norway took the lead as the main supplier of natural gas to Europe in 2022. Especially through pipelines it exported 118bcm from a total of 124bcm in 2024. The supplies have been steady despite some maintenance activities in a few plants. It still plays its role as main sup- plier as it ensures about 30% of the continent’s needs of natural gas.
By the end of last December, a contract between some European countries and Russia has been expired which was transporting roughly 15bcm of natural gas through pipeline via Ukraine. This reduces the share of pipelines supplying to Europe which will be balanced with LNG. In the short term there are no big volumes expected to come from North African countries including Algeria and Libya and other countries like Azerbaijan and Norway.
1. The rising share of LNG in the European market
In 2021 the share of LNG in natural gas imports of Europe was only 20%. Sufficient deliveries through pipelines were maintained and ensured, even with a very competitive prices. Russia was dominating the lion’s share by 40% estimated at 137bcm. Things quickly changed and with a rapid pace the liquid chilly molecules started to replace the gaseous ones. Gradually along weeks and months it spiked to 41% of the total European imports by 2023.
This lead to the construction of several LNG infrastructures, including the FSRUS, as Germany was leading this shift. Germany was hugely reliant on natural gas supplies especially through the Nord Stream pipelines and the shift required huge investments in a very short period of time. The US is ensuring a smooth transition phase through the delivery of LNG via ship. The amount of shipments is still rising every day and will intensify in the future as the flow of gas through Ukraine is interrupted.
2. The Role of the US to fill up the gap left by the piped Gas
In the last few years the United States have emerged as the big player in the global natural gas production and became the largest producer with estimated 1080bcm in 2024. This allows it to hold 25% of the world’s share. These considerable volumes allowed the US to be the safe supplier for many European countries. Using a strong and active fleet of vessels crossing the Atlantic Ocean to ramp up supplies to a thirsty market which is looking for sustainable alternatives and for 2 main
reasons:
1. Diversify the suppliers with more trusted sources even with high prices.
2. High cost will encourage many governments to make renewable energy sources more competitive and will open the door for more investment.
To be energetically independent, the share of energy produced using renewable sources is incredibly spiking in some European countries. In Germany the electricity generated from renewables exceeded 62% by
2024. This is a record and obviously showing the result of these investments. At the same time we have to highlight that natural gas is still playing a crucial role in many industry sectors, especially in petrochemistry and the production of fertilizers. As the volatility and jumping prices have impacted many firms it still is the backbone for many specific industries.
Natural gas prices hovered 50 €/mwh over a period of time as the result of extreme weather conditions. Once again natural gas was the immediate energy provider, while wind energy was not delivering the expected outputs. It dropped by 25% in a year in Germany.
Taking this into account it becomes clear that renewables are vital for the future. Energy transition to renewable sources has the advantage of low carbon emissions and sustainability. On the other hand natural gas will remain the cleanest among the fossil fuels. Combining renewables and natural gas would hugely contribute to reach future targets and secure energy supplies.
3. The Economic impact of the shift from Piped gas to LNG
Piped Natural gas is directly transported in its gaseous state through pipelines over long distances, especially between countries and continents (Africa-Asia). This only requires compression stations in order to push the gas from point A to point B and it will be directly consumed by the end user.
LNG requires a different process which is more costly as it requires more energy. Making liquid natural gas needs specific equipment and requires complex methods. The temperature has to be dropped to -162° Celsius which absorbs more energy and carbon emissions. These chilly substances have to be pumped to specially insolated vessels which transport the LNG of long distances. At arrival the liquified gas is pumped to regasification units to return it to its natural gaseous state.
Back in 2021 the share of natural gas entering to the European Union was bigger. The gas was transported over shorter distances and did not require regasification. As a result the use of natural gas was more economical. Now this share is narrowing as LNG is gradually taking a bigger share of the market. As a result of the higher price this is impacting several economies in Europe.
Right now the challenge is to produce energy with a competitive price and low carbon emissions. This is the reason why many countries have launched large scale investment plans seeking for sustainable alternatives to fossil fuels. Fossil fuels have been identified to be a considerable part of the pollution around globe in a growing pace. The share of renewable energy sources is growing, especially in Germany which invests more and more in new projects. At the same time as natural gas is not only used to generate power, it also is a vital component of the petrochemistry.
Finally we have to accept that diversification of energy supplies is a must for any country as a strategic plan for a secure supply of energy. There are some points that have to be taken into consideration:
1. Diversify but with balanced shares
2. Competitive prices
3. Low carbon emissions
4. Safe and secure suppliers
5. Long term contracts with suppliers for secure and steady deliveries.
AUTHOR
Choeib Boutamine Ranadrill Consulting CEO
c.boutamine@ranadrill.com
Pipeline Technology Journal
