(Montel) The EU faces relying on the spot market for around 70% of its imported LNG by 2030 if no new long-term deals are signed, exposing it to volatility, said the International Energy Agency’s chief energy economist.
The EU was set to meet a record half of its imported LNG supply via spot purchases this year, up from just 20% in 2021, he said, without stipulating outright volumes.
Since Russia’s invasion of Ukraine in February last year, the EU has switched from relying on Russian pipeline gas to LNG, from countries such as the US and Qatar.
But many buyers remain reluctant to secure long-term deals for the chilled fuel, amid regional efforts to reduce fossil-fuel usage over the coming years.
Gould said that without locking in supply – and prices – events such as the current strike action at Chevron’s Australian LNG facilities could have “quite strong implications”.
Meanwhile, he said gas demand in Europe had already dropped by 33bcm – or 8% – in the first eight months of the year compared with the same period in 2022, leading to lower prices.
He did not stipulate the total January-August volume.
The Dutch TTF front month – Europe’s benchmark – was last seen trading at EUR 34.9/MWh, while it settled at an average EUR 133/MWh in 2022.
“We are still seeing declines year on year in industrial gas consumption,” he said, noting “no bounce back” was yet visible in terms of gas demand.
The decline was also due to lower power demand, the expansion of wind and solar capacities and higher nuclear and hydropower output, he said.
The IEA in February forecast the region’s gas demand to decline this year by just 10bcm – or 3% – from 2022’s total of 350bcm.