US LNG deliveries to Europe have probably already reached their peak, because the continent is reducing its gas consumption, European integrated energy company MET Group's chief executive Benjamin Lakatos told Argus.
Source: Argus
"We do not expect Europe to consume more gas — it is going down," Lakatos said on the sidelines of last week's Gastech conference in Houston.
Lakatos believes that natural gas will play a transition role in Europe for "10-15 years longer than people think" and that it will remain important in the medium term, particularly following the buildout of regasification capacity.
But zooming out from Europe, the debate is whether natural gas is only a transition fuel or is really a "new booming economy" that will drive global energy demand in Asia and Africa, Lakatos said. This approach "is like fresh air for a European gas player", he said.
The MET head is unconcerned by President Joe Biden's administration's freeze on new US LNG export licences. MET is affected, having signed an initial agreement for 1mn t/yr of offtake from the 9.3mn t/yr Commonwealth LNG export terminal on a 20-year term. But "talking to our partners here, everybody looks relaxed", Lakatos said. "In Europe, we learn to be exposed to regulation."
In any event, those LNG projects without a permit "won't have a direct effect on European supply" as the incremental LNG supply will most likely go to Asia, Lakatos said.
Lakatos foresees no physical supply issues in Europe this winter. He assumes that Russian gas transit through Ukraine will stop from 1 January when the existing Russia-Ukraine transit contract expires. But "the total volume effect of this by now is smaller than the weather effect", Lakatos said.
"I believe that the overall gas supply security is solved for Europe," Lakatos said. But Europe is not out of the woods from a financial perspective — "gas is a commercial issue for Europe", with high prices meaning that industries are uncompetitive, Lakatos said.
Lakatos expects price volatility in Europe to stay lower than in 2022 and 2023 but higher than in the years before that. And "the drivers are slowly shifting", with Asian demand starting to play a bigger role in this volatility, he said.