The US appears to have ambitions to dominate the global market for liquefied natural gas with growing exports of gas produced from shale rocks. The volumes are certainly available and a number of export terminals are being built on the country’s coast. But the market is complex and competitive. At the end of July, Donald Trump proclaimed that the EU had agreed to build up to 11 new import terminals to receive LNG from America.
This, the president said, would be one of the key elements in a dramatically improved trade deal between the EU and the US, and had apparently been agreed at a meeting in Washington DC between Mr Trump and Jean-Claude Juncker, president of the European Commission. A meeting with Mr Juncker did take place on July 25, but Mr Trump’s statement appears to stretch reality. Mr Juncker did talk of strengthening co-operation on energy and said that “the EU will build more terminals to import natural gas from the US”, but it is not clear if he was aware that there are already plenty of underused terminals in Europe. Indeed, Europe’s existing LNG terminals are operating at only some 25 per cent of their capacity; three-quarters of existing import facilities are unused because of lack of demand.
There could be some new-build to meet market needs in particular countries, such as Spain and Croatia, but overall Europe is likely to see more capacity closed than opened over the next few years. The simple reason for this is that gas demand is flat, after falling by 8 per cent over the past decade, and may well decline further as renewables — in many cases mandated or supported by public policy measures — take a growing share of a gradually shrinking energy market. Europe’s own gas production — from the UK and the Netherlands — is certainly declining but the established pattern of imports from countries such as Norway, Qatar and Russia is secure and will be soon be augmented by extra supplies from Russia through the Nord Stream 2 pipeline, which is now being built.