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5th Dec 2022

EU countries rush to expand gas import capacity

  • New liquified gas projects typically need to run 20 years to earn their money back (Photo: kees torn)
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As Europe is struggling to replace Russian gas with imported liquified natural gas from overseas, member states are rushing to resurrect previously rejected gas projects which threaten to lock in unnecessary gas use for decades, new analysis shows.

According to the latest data in Global Energy Monitor's (GEM) Europe Gas Crisis Tracker, 26 liquified natural gas (LNG) terminals and expansions have been proposed or revived since the Russian invasion of Ukraine started in February.

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"This is at odds with recent analysis showing that the EU has enough gas import capacity," Greig Aitken, GEM analyst, told EUobserver on Monday (16 May), adding that the expansion of LNG "clashes" with EU goals to reduce gas use.

The EU is set to announce its ambitious RePowerEU strategy on Wednesday, which aims to slash Russian gas imports by two-thirds before the year's end and fully decouple from Russian imports by 2027.

This involves accelerated investment in renewables and energy efficiency.

But the EU is also looking at the US, Canada, Egypt, Israel, Nigeria, Senegal and Angola to increase LNG supplies to Europe by 50 billion cubic metres (bcm) per year.

"The initial RePowerEU proposal in March helped catalyse the stampede of LNG proposals we see now," Aitken said, adding that the plan should focus on reducing demand "rather than locking-in fossil fuels with unnecessary LNG expansions."

Artelys, a Brussels-based data consultant, in a study this month, concluded that the EU only needs one extra LNG terminal in Finland and the Baltic region if it were to replace all Russian gas imports with LNG in the case of a cut-off.

"New LNG terminal proposals currently being put forward," the researchers conclude, "are found to be unnecessary from a security of supply point of view. If added, these assets would quickly end up as stranded assets."

But some EU lawmakers have signalled excess capacity may be a good thing.

"I hope we will have more capacity than we can use," Jakub Černohorský, energy attaché for the permanent representation of the Czech Republic to the EU, the upcoming EU president, said. "We need excess capacity to redirect our flow. This will make Europe stronger."

But according to Artelys, new LNG investments are most at risk of becoming stranded assets due to their relatively high costs.

New GEM figures published on Monday reveal an additional import capacity of 93 billion cubic metres has been proposed since the European Commission announced plans on 8 March to quit Russian gas— on top of the already existing capacity of 157 bcm per year.

The European Union imported 155bcm of natural gas from Russia in 2021.

Accelerating renewable energy and encouraging energy saving and energy efficiency is a more effective, cheaper and environmentally less destructive answer to the bloc's energy security needs, Ember, a think tank based in the UK, also concluded in a March study.

Revealed: Big Oil shaped EU's gas-cutting strategy

Internal documents found EU Commission president Ursula von der Leyen and energy commissioner Kadri Simson coordinated their Russian gas cutting strategy with oil CEOs to determine which measures were "feasible".

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