LNG Market Outlook Featured Article

Europe to Soak up Larger Share of Supply in the Outlook

This current feature was extracted from the latest edition of Poten’s LNG Market Outlook, a monthly service published on September 28, 2022.

Comparing current winter import forecasts for Northeast Asia and Europe shows Northeast Asia’s imports dropping by 10 MMt from 117 MMt in the winter of 2020 and 2021 to 107 MMt in the winter of 2022 and 2023.

Much of the drop is attributable to demand destruction in China (see China section following), but imports are also expected to decrease in Japan and Taiwan when compared to previous winter import totals.

Imports for South Korea are forecast to be flat with historical winter levels due to low inventory levels. Conversely, LNG inventory levels in Japan are relatively high. As a result, JERA recently sought to resell a cargo earlier this month and imports are forecast to be lower than previous winters for Japan. Winter imports for Taiwan are forecast at 9 MMt – down from 10.2 MMt last winter.

Winter LNG Import Share (Oct-Mar)

European winter imports are forecast to rise above last winter’s levels from about 57 MMt to roughly 63 MMt. LNG imports will continue at a robust pace for the foreseeable future with limited to no supplies of Russian gas available (see Europe section following).

Europe is forecast to import a share of about one third of total available supply this winter, while Northeast Asia’s share drops to about 50% from 60% in the winter of 2020 and 2022.

In this month’s forecast, significant changes were made to the European and Northeast Asia import outlook.

LNG Import Forecast Changes

Imports for Europe were raised by 6.2 MMt but were raised much higher in 2023 and 2024 at 14.5 MMt and 15.1 MMt, respectively. The decline of Russian gas pipeline exports to Europe seen in 2022 is forecast to continue through much of the forecast period, leaving Europe mostly dependent on LNG.

Meanwhile, imports for Northeast Asia were lowered and a larger share of available supply will go to Europe in 2023 and 2024 than previously anticipated.

LNG Export Forecast Changes

On the export side, the largest changes were applied to Qatar, Algeria, and Nigeria. The export forecast for Qatar was lowered by 500,000 t/y in 2022 to 79 MMt/y, by 3.5 MMt/y in 2023 to 78 MMt/y and 3.2 MMt/y to 78.7 MMt/y in 2024. Exports were raised from Algeria on higher output expectations and lowered in Nigeria on upstream issues.

 

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