Europe may need to maintain competitive pricing to secure the additional 30 billion cubic metres (bcm) of liquefied natural gas (LNG) required to replenish its gas storage levels, reported Reuters, citing sources.
This insight comes from Peder Bjorland, vice-president of the natural gas market at Equinor, who shared his views with the news agency.
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Equinor previously projected that Europe would require approximately 250–300 more LNG cargoes this year compared with last year to fill storage tanks, which were left two-thirds empty after the winter. This demand is expected to keep the gas market tight.
Bjorland emphasised the role of pricing in securing these volumes, especially in competition with Asian buyers like China.
“I think price is the most important tool in this game,” he stated during an interview at the Flame conference in Amsterdam.
China, the world’s largest LNG buyer, has seen a decrease in demand but is now showing signs of a rebound.
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By GlobalData“That doesn’t necessarily mean that we will see a lot of new LNG purchases, but we will probably see a reduction of resale of Chinese cargo to Europe,” Bjorland added.
Weather conditions will also play a pivotal role, with Asian demand linked to air conditioning needs over the summer and Europe’s needs tied to the winter heating season.
Europe’s position could become “more vulnerable” if it enters the winter season with storage levels below 85% full.
The European Parliament has recently eased gas storage filling requirements to prevent inflated prices.
Meanwhile, Equinor is looking towards Asia for growth, with Bjorland noting: “For Equinor, the growth area will be LNG, and I think the growing region will be Asia, especially India, China and South East Asia.”
In a separate report by Reuters, Europe is for the first time working to replenish its natural gas storage without significant Russian pipeline supplies.
However, the EU’s plans to completely phase out Russian gas by the end of 2027 present a formidable challenge.
Despite reduced pipeline imports from Russia since February 2022, the EU still receives around 19% of its gas from Russia through LNG imports and the TurkStream pipeline.
The European Commission is set to propose legal measures to ban remaining Russian pipeline gas and LNG imports under existing contracts by the end of 2027, with a ban on new deals and existing spot contracts by the end of 2025.
Despite the daunting task ahead, Europe’s gas markets are currently stable and storage levels have been recovering.
As of 11 May, storage was at 43% capacity, with expectations it will reach 90% by late September.
