Key facts
- European LNG imports are set to increase this month to 7.98 million tons.
- Asian LNG imports are estimated to decline to 20.09 million tons this month.
- LNG spot prices have risen 150% since February.
- Qatar's LNG export hub remains largely closed, impacting global supply.
- European Union natural gas storage levels are substantially below the five-year average.
European buyers are stepping up purchases of liquefied natural gas (LNG) despite a significant price surge, as Asian demand wanes and global supply remains constrained. LNG was trading at $26 per million British thermal units in the week to September 11, a 150% increase from February.
Analysts estimate that September LNG flows into Asian countries will be 20.09 million tons, down from 22.27 million tons a year ago and 22.25 million tons a month prior. In contrast, European LNG imports are on track to increase to 7.98 million tons this month and potentially reach 10.53 million tons in October, driven by substantially below-average natural gas storage levels across the European Union ahead of winter.
Qatar's LNG export hub remains largely offline, contributing to a global supply shortfall estimated at 12.8 million tons annually. While new U.S. capacity is anticipated, it is not expected to come online imminently. This situation has led to Europe outbidding Asia for available cargoes, a strategy that comes with significant financial risk, particularly after European gas companies incurred billions in losses during the winter of 2022 when mild weather led to lower-than-expected demand after a rush to secure supply.
China is mitigating the impact of lost Qatari volumes by limiting spot LNG imports and relying on long-term contracts and pipeline gas from Russia. Countries unable to afford spot LNG may turn to coal or other power sources, while European nations, having shut down coal and nuclear plants, are compelled to purchase LNG at high prices.