Oil & Gas

Europe’s liquefied natural gas (LNG) imports saw a rare increase in October, marking the first rise in 10 months. This uptick came as buyers stocked up on LNG to prepare for the upcoming winter, taking advantage of steady prices in August and September. The European Union had aimed to fill its gas storage sites ahead of winter, with storage sites reaching 95% full—well above the 90% target set by its self-imposed deadline. The urgency stemmed from the expiration of the transit agreement for Russian gas flows through Ukraine at the end of 2024, raising concerns about potential supply disruptions.

Despite the increase in Europe, global LNG import trends diverged, with Asia seeing a slight decline in imports for October. China's LNG imports, in particular, are estimated to have decreased slightly compared to September, possibly due to its gas storage nearing capacity. However, Asian imports remain higher than last year, with the region continuing to lead global LNG demand growth. This shift is partly attributed to China's growing adoption of LNG-powered trucks, a move spurred by government policies aimed at reducing air pollution and carbon emissions, as well as the availability of cheaper natural gas.

Europe's increase in LNG imports was also driven by rising energy prices, which attracted more shipments to the region. As tensions in the Middle East flared and unplanned outages in Norway raised concerns over supply security, European prices rose, making it more attractive for LNG sellers to send cargoes to the region. October's imports rose to 7.54 million metric tons, a significant increase from the previous month, with the higher demand marking the strongest import level since May. However, Europe's year-to-date LNG imports are still down by 20% compared to last year, reflecting a shift in consumption patterns as the region seeks to reduce its dependence on gas.

Meanwhile, the global LNG market continues to expand, with Asia driving much of the growth. As China solidifies its position as the world's largest LNG importer, demand for LNG is expected to surge, fueled by industrial decarbonization and the rise of AI technologies and data centers in the region. Shell projects a 50% increase in global LNG demand by 2040, largely driven by higher consumption in Asia. The transition from coal to gas in China, alongside growing LNG consumption in South and Southeast Asia, is set to propel LNG demand for decades to come, ensuring that Asia remains the central driver of growth in the global LNG market.