Impact of Trends in Global LNG Supply and Demand on the European Gas Market in 2030

Abstract

The increased imports of liquefied natural gas (LNG) are one possible way for the EU to diversify its natural gas supply by 2030. However, as LNG is a globally traded commodity of limited abundance, other consumers' trends in LNG demand will impact the price and availability of LNG in Europe. This work couples a global LNG trade model to a high-resolution gas system model of the real European gas network to quantitatively assess the impact of possible different trends in global LNG supply and demand on the European gas market in 2030. It is found that by 2030, LNG from USA replaces Qatari LNG in the European gas market, while Qatari LNG supplies the increasing LNG demand in Asia. Due to the limited abundance of LNG supplies in 2030, the market penetration of Russian pipeline gas in Europe is found to increase by 50% compared to 2016. Further, it is found that the market share of LNG in the European gas market of 2030 is highly price sensitive, with a 10% reduction in LNG price leading to a doubling in market share. Such a 10% reduction in LNG prices is found to occur, if LNG demand in Asia is half that which is currently anticipated. This underlines the dependence of an LNG supply in Europe to trends in other markets of the world. Therefore contrary to general opinion, a strategy that relies on increased LNG imports is not necessarily politically less risky than a strategy that relies on increased imports of pipeline gas.