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In its effort to replace Russian LNG supplies, Europe has relied on liquefied natural gas (LNG) from the US throughout 2023. The continent was the top destination for US LNG last year, reaching 7.8 Bcf/d, accounting for 66% of total US exports. The top importers of US LNG were the Netherlands, France, and the UK, totaling 35%, equivalent to 4.2 Bcf/d of US LNG exports.
However, the situation has now reversed, and Russia has once again overtaken the US as Europe’s largest LNG supplier, despite the bloc’s attempts to block energy sources from Moscow due to the conflict in Ukraine.
This is because imports from the US are declining significantly. According to vessel tracking data compiled by Oilprice, US deliveries to Western Europe in July fell to their lowest level since 2021.
This significant change indicates a trend of the US favoring more profitable destinations. US seaborne gas is usually unrestricted in terms of destination. As hot weather boosts demand in Asia, more cargoes were delivered there than in any month since 2021.
Meanwhile, disruptions caused by tropical storms further exacerbated the cargo shortage in Europe, causing one of the US’s largest export plants to halt loading for over two weeks due to Storm Beryl.
Competition is also intensifying elsewhere. Egypt, facing power shortages amid extreme temperatures and declining domestic gas production, has boosted LNG imports. The North African country has paid higher prices than Europe to attract supplies and captured a portion of US supply this month.
Although Europe doesn’t require much gas during the summer, if production continues to decline and with winter approaching, prices will likely increase. This also highlights Europe’s challenges in phasing out Russian energy.
The European Union has not implemented any complete ban on LNG imports from Moscow. Some expect the transit ban to start next year, but it could lead to more fuel being stranded in Europe due to complex logistics. If fuel competition remains intense, rejecting those cargoes will be difficult.
According to the US Energy Information Administration (EIA), the US surpassed both Australia and Qatar to become the largest LNG exporter in 2023, with export capacity reaching an average of 11.9 billion cubic feet per day (Bcf/d) last year.
Strong demand in Europe, combined with the resumption of normal operations at the Freeport terminal and high utilization rates, helped the US increase LNG exports by 12% in 2023, according to EIA’s monthly natural gas report.
According to Oilprice
