Europe’s liquefied natural gas (LNG) imports hit record levels of 12.7 Bcf/d in November as global supplies have increased and prices have fallen, according to the Energy Information Administration (EIA).
EIA said the monthly record implies a 51% utilization of European regasification capacity. European imports have been steadily increasing since late last year. From January through November, imports averaged 11 Bcf/d, surpassing the previous record of 8 Bcf/d set in 2011.
Qatar, Russia and the United States have increased exports to Europe by a combined 3.7 Bcf/d this year, according to the EIA. The United States accounted for the largest increase with exports growing from 0.4 Bcf/d in 2018 to 1.8 Bcf/d through the first 11 months of 2019, followed by Russia (1.3 Bcf/d) and Qatar (1.0 Bcf/d) over the same time.
EIA also noted recently that U.S. LNG exports set records in October and November, as more than 100 cargoes departed and daily send out surpassed 6 Bcf. European destinations were among the leaders for U.S. exports in October, with South Korea (42.2 Bcf), the UK (26.3 Bcf), Japan (24.5 Bcf), France (14.2 Bcf) and Spain (13.7 Bcf) the top five countries for domestic cargoes, according to the Department of Energy.
Europe has played the role of a swing player for LNG this year, helping to balance a rapidly evolving global market following recent years in which imports have been low.
EIA noted that lower spot LNG prices in Asia “have narrowed the price differentials” between delivering the fuel to Asia or Europe and contributed to increased shipments to the latter. Increasing global supplies have also pushed down prices in Europe as well, providing incentives for gas-fired power generation, while natural gas production in the UK and the Netherlands has “required larger volumes” of European gas imports via pipelines and LNG terminals, EIA said.
Lower gas demand in Asia has also freed up additional volumes, while buyers have been more flexible in taking spot cargoes as opposed to more traditional purchases under long-term contracts.
The spike in European imports has also left storage inventories on the continent high. And with global supplies growing, there are concerns, particularly in the United States where export terminals are ramping up, that the market could tighten further next year and prompt liquefaction facilities to shut-in supplies, which could tank U.S. gas prices.
Asian LNG consumers, including China, India, Japan and South Korea, imported less gas this year. Those countries accounted for 65% of all global gas imports in 2018. Through the first 11 months of 2019, year/year imports slipped by about 3% to 26.1 Bcf/d, according to the EIA.
Natural gas consumption in Japan was dented by lower gas-fired power generation after five nuclear reactors restarted and renewable energy sources increased. The same was true in South Korea, EIA noted, as more nuclear plants returned to service after a prolonged maintenance period.
Demand for the super-chilled fuel in China declined as the economy slowed and warmer weather set in. LNG imports in China grew by more than 40% from 2017-2018. U.S. exports to China have also declined as a trade war with the country has persisted and tariffs on U.S. shipments remain in effect.