Europe’s liquefied natural gas (LNG) imports rose in October for the first time in ten months, driven by efforts to replenish gas storage sites ahead of winter. This increase comes as the transit agreement for Russian pipeline gas flowing through Ukraine is set to expire at the end of the year.
The surge in LNG imports during October was mainly attributed to buyers securing steady-priced fuel at the end of summer. Meanwhile, Asia saw a slight decline in LNG imports, mainly due to reduced demand from China, according to data from commodity analytics firm Kpler, cited by Reuters columnist Clyde Russell.
Although Asia’s LNG imports were lower compared to September, they were still higher than in October of the previous year. Year-to-date, Asian imports have increased significantly, while European LNG imports have dropped. A milder winter in 2023/2024 also contributed to Europe’s lower demand for LNG compared to last year.
Europe’s gas storage sites are currently 95% full, exceeding the European Union’s target of 90%, which was reached well before the November 1 deadline. However, experts warn that even with the full storage, the gas may not be enough to cover Europe’s winter needs. Gas storage volumes were slightly lower at the end of September compared to the same period last year.
In recent weeks, European gas prices have risen due to concerns about supply disruptions, especially with rising tensions in the Middle East and unplanned outages in Norway, Europe’s largest gas supplier. Additional concerns stem from the upcoming expiration of the Ukraine-Russia gas transit deal on December 31, 2024.
In response to these uncertainties, higher European gas prices have attracted more LNG cargoes. October’s LNG imports into Europe climbed to 7.54 million metric tons, up from 6.37 million tons in September. This marks the highest monthly import level since May, according to Kpler data.
In contrast, Asia’s LNG imports fell slightly to 24.36 million tons in October, down from 24.72 million tons in September. This is the lowest import level since July, according to Kpler data.
On a year-over-year basis, Europe’s October LNG imports were lower compared to October 2023, while Asian imports grew. Asia continues to drive global LNG demand growth, with significant increases in LNG consumption throughout the region.
From January to October, Europe’s LNG imports have dropped by 20%, while Asia’s imports have risen by 10.3%, according to Kpler data.
In China, LNG imports were slightly lower in October compared to September, possibly due to gas storage nearing capacity. However, the country’s demand for LNG is also growing, driven by an increase in the use of LNG-powered trucks. The shift from diesel to LNG in China’s transportation sector is part of a broader effort to reduce air pollution and lower carbon emissions, with government policies encouraging the use of LNG trucks.
China has become the world’s largest LNG importer, surpassing Japan in recent years, and is expected to be a key driver of global LNG demand growth. Shell, the world’s largest LNG trader, predicts that global LNG demand will increase by 50% by 2040, with rising demand from Asia, including coal-to-gas switching in China and growing LNG consumption to fuel economic growth in South and Southeast Asia.
Additionally, the growing demand for LNG to power data centers and AI technology in Asia is expected to further boost LNG consumption in the region.
As global LNG demand continues to rise, particularly in Asia, the LNG market is set to grow into the 2040s, driven largely by China’s industrial decarbonization and increased demand from other parts of Asia, Shell says in its annual LNG outlook.
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