LNG

LNG – Liquefied Natural Gas – has been on a strong and global growth course for years. Due to a significant expansion of liquefaction and regasification capacities in recent years, more and more LNG volumes come onto the international sales markets. As a result, LNG trading is increasing and will continue to grow in the coming years. Additional liquefaction capacities being under construction, mainly in the USA and Australia, will provide the market with further LNG volumes.

The primary sales market for LNG is traditionally located in the Asian-Pacific region. Here, demand increase has fallen short of expectations. Thus, prices for LNG have dropped and, in parallel, a process towards energy market liberalisation has begun. These developments have not only impacted the Asian sales markets but also the international markets for natural gas.

In consequence, the following changes may arise:

  • LNG, as a flexible source of supply, could build a price link between global gas markets, so that LNG prices in Asia and Europe continue to converge.
  • The liberalisation of the Asian LNG markets will lead to greater transparency and to an implementation of additional trading points with a growing importance of hub prices.
  • Asian long-term contracts for supply of LNG, which are predominantly linked to oil prices, come under pressure. Contract and price adjustments will become necessary.
  • For contractually agreed volumes that cannot be sold in Asia, new sales markets have to be found.
  • New LNG contracts will be concluded which include smaller volumes, greater flexibility and shorter durations.

European LNG market

In the past, LNG has played an important role in South European markets. Yet, LNG is also becoming increasingly important in North-West Europe which has mainly been supplied by pipeline gas so far. This development is reflected in the LNG and Gas Storage Strategy of the European Union from February 2016 which considers the dynamic development of the global LNG market as an opportunity for the energy supply and the competitiveness of the EU. Due to a strongly declining gas production, LNG is supposed to play an important role in the diversification and improvement of a secure supply of natural gas. A new and growing market segment is small-scale LNG for use of LNG as clean and environmentally friendly fuel in the shipping industry and in road-based heavy-duty traffic.

But there still remain many questions to be answered. How much LNG can the European gas market absorb and how do these volumes impact on the supply competition, especially with regard to pipeline gas from Russia and Norway? From which countries does the export of LNG make economic sense and how are US LNG suppliers going to position themselves? What is the actual potential for small-scale LNG in Europe? Which LNG import terminals should be used to best bring LNG volumes into the market? Does Germany need an own LNG infrastructure?

Consulting services

In the context of the global changes in the LNG markets, we offer the following consulting services:

  • Support in contract negotiations:
    • from the preparation and negotiation, as well the conclusion of a LNG contract,
    • to the renegotiation of contractual conditions due to a price adjustment or other requests,
    • through the assistance in different roles before and during arbitration proceedings for dispute resolution.
  • Market and competition analyses, as well as development of market strategies for LNG producers, buyers and infrastructure operators
  • Potential analyses and strategies for market entry into the European small-scale LNG market
  • Support in regulatory matters
  • Market analyses regarding access to European LNG import terminals
  • Support in technical and commercial issues concerning investment decisions into LNG assets
  • Reports on aspects regarding the overall supply system, e.g. LNG as part of security of supply

Publications

LNG Market Radar (13th edition, April 2025)

The latest edition of our LNG Market Radar is now available for download here.

The key takeaways are:

  • LNG Imports in many Western European countries in Q1 2025 increased compared to Q4 2024. Germany was an exception with average utilization falling to 21%, the lowest of all European countries that import LNG
  • Significant extension of LNG liquefaction capacity is planned in the U.S. and Qatar, increasing LNG the supply capacity of the three largest exporters from 341 bcm/a in 2025 to 481 bcm/a in 2028
  • In North America, Canada has ambitions of becoming a second LNG exporter behind the U.S. with projects amounting to 65 bcm/a; Canadian projects are located on the Pacific coast und thus oriented towards Asia
  • Global LNG supply is expected to become more abundant in the second half of the 2020s, given that export capacity is expected to show a higher growth than LNG consumption

LNG Market Radar (12th edition, October 2024)

The 12th edition of our LNG Market Radar is now available for download here.

The key takeaways are:

  • EU LNG Imports in Western European countries in Q3 2024 decreased compared to Q2 2024 and to Q3 2023 – considering the high filling levels of natural gas storages in the EU, the decrease in LNG imports is not surprising
  • EU countries with large LNG import capacities showed significant underutilization of those capacities in Q3 2024. This means that imports could be increased very quickly should the need arise – security of supply is ensured
  • Russian LNG exports have increased slightly between 2021 and 2023 (from 40.8 bcm to 43.4 bcm), with rather constant shares going to Asia and Europe; among Asian countries, imports of Russian LNG shifted towards China
  • In the period Q1-Q3 2024, overall EU LNG imports went down (-14% Y-o-Y), while the share of Russian LNG went up to 20% (vs. 14% in the year before); the main EU destinations for Russian LNG are Spain, France, Belgium and the Netherlands
  • A ban on transshipments of Russian LNG in EU ports was passed in June, affecting a volume of approx. 5 bcm/a only. A ban on LNG imports to the EU would be more effective considering the affected volumes, but imports will continue to be permitted

LNG Market Radar (11th edition, July 2024)

The 11th edition of our LNG Market Radar is now available for download here.

The key takeaways are:

  • Utilization of European LNG import terminals declined in Q2’24 compared to the same quarter in 2023; this effect is stronger in countries located in the Western part of Europe than in other European countries
  • European LNG imports increased sharply in recent years; the bulk of that growth happened under purchases in the LNG spot market; imports under long-term contracts, on the other hand, grew at a lower rate
  • Most new long-term LNG sale and purchase agreements (globally) have a price indexed to crude oil (Brent) or the U.S. gas trading market (Henry Hub)
  • European importers, however, require a price based on European hub prices when entering into firm offtake commitments; therefore, most new LNG long-term contracts to Europe are flex contracts

LNG Market Radar (10th edition, January 2024)

The 10th edition of our LNG Market Radar Germany is now available for download  here.

The key takeaways are:

  • In Q2 2023, utilization of European LNG terminals went down in most countries compared to the same quarter the year before; a capacity growth occurred due to the startup of operations of new FSRU.
  • While in Northern Europe average utilization fell substantially to 58% in Q4 2023 from 72% in Q4 2022, the decrease in Southern Europe was more moderate, from 49% to 42%. The supply situation has eased.
  • The weighted average LNG price of EU imports in 2022 was considerably below hub prices (TTF spot) which had surged to unprecedented levels. Since early 2023, both prices have been on the same level.
  • The LNG import prices of China and Japan were significantly above the EU LNG import price in 2019 and 2020; this reversed in 2022 and 2023. This is due to oil-indexed long term import contracts of those two countries.

 

Utilization of German LNG terminals in the autumn of 2023

2023-11-27_Auslastung_LNG-Terminals_D_en.pngThe utilization of German LNG terminals on the North Sea coast has been high so far in the fourth quarter. Regarding the different terminals, we note:

  • From the beginning, the FSRU in Wilhelmshaven has been highly utilized (load factor above 80%) constantly.
  • The Brunsbüttel terminal stands at 86% average utilization in Q4 which is the highest among all German terminals. Compared to the previous quarter, Q3 2023, the terminal’s capacity reported on the ALSI platform was reduced significantly. Presumably, a higher capacity was reported until the end of August 2023 which cannot be accomplished with the terminal’s current grid connection. The capacity currently reported (61.6 GWh/d) is probably more realistic than the capacity reported earlier (122.4 GWh/d) for the time being.
  • The terminal in Lubmin has increased its capacity compared to Q2 2023, but the flows have declined. The average utilization in Q4 only stands at 13% currently.

Arbitration

Strategy development

Publications