Venture Global, a U.S. liquefied natural gas (LNG) producer, has signed a five-year agreement to secure approximately 1 million tonnes per annum (mtpa) of regasification capacity at Greece’s new Alexandroupolis LNG terminal, beginning in 2025. This deal is expected to enhance Europe’s energy security by facilitating the import of alternative natural gas supplies through the new South-North Vertical Corridor, according to a report by Reuters.
Mike Sabel, CEO of Venture Global, emphasized the importance of this deal, stating, “This move further integrates our business by expanding our assets across the LNG supply chain, including production, shipping, and regasification. This infrastructure will be a game changer for Central and Eastern Europe, enabling the region to diversify its energy sources and access a reliable supply.”
Shift in Europe’s Gas Suppliers
In recent years, Norway and the U.S. have replaced Russia as Europe’s largest gas suppliers. In the past year, Norway delivered 87.8 billion cubic meters (bcm) of gas to Europe, accounting for 30.3% of total imports. The U.S. provided 56.2 bcm, making up 19.4% of total imports. Notably, the U.S. has become the leading supplier of LNG to Europe, providing nearly half of the continent’s total LNG imports last year.
The U.S. share of European LNG imports has rapidly increased: it supplied 27% in 2021, 44% in 2022, and 48% in 2023. This surge can be largely attributed to the ongoing conflict in Ukraine, which has heightened Europe’s demand for U.S. gas. Concurrently, Europe’s capacity to receive LNG is expanding, with regasification capacity expected to reach 29.3 billion cubic feet per day (Bcf/d) by 2024, a 33% increase since 2021. Germany is leading this expansion, adding 1.8 Bcf/d in 2023 and planning an additional 1.6 Bcf/d for 2024.
U.S. LNG Exports Hit Record Highs
On a global scale, the U.S. exported a record 56.9 million metric tons of LNG in the first eight months of 2024, surpassing shipments from Australia (54.3 million tons) and Qatar (53.7 million tons). This marks the second consecutive year that U.S. exporters have led global LNG exports.
However, U.S. LNG shipments to Europe have declined significantly in 2024, with a 22% year-over-year drop from January to August. This decrease is largely due to a surge in renewable energy use across Europe. Solar and wind power’s contribution to electricity generation has increased from 16.4% in 2022 to 20.5% in 2024, while fossil fuel generation has fallen from 44.6% to 36.6% during the same period. Coal power has suffered the most, and natural gas generation has also seen a reduction, decreasing from 26% in 2022 to 22% in 2024.
Current Market Conditions
Natural gas futures in Europe have recently dropped below €35 per megawatt-hour, the lowest in seven weeks. This decline is attributed to warmer weather forecasts and plentiful gas inventories. Currently, Europe’s gas storage is 0.1 bcm higher than last year and 8.6 bcm above the five-year average. Storage capacity utilization across the continent stands at 93.4%, with Germany at 95.6%, Italy at 94.9%, and the Netherlands at 91.4%.
Despite the favorable market conditions, U.S. gas producers are facing challenges. Average LNG export prices dropped 25% year-over-year in the first half of 2024, resulting in a revenue decline of $4 billion compared to the same period in 2023, totaling $13.2 billion. This is the lowest revenue for U.S. LNG exports since the first half of 2021 and marks a significant decrease from the peak earnings of over $12 billion in the second half of 2022.