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LNG imports into Europe to jump this summer

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World Coal,

Estimated imports of LNG into Europe this summer are significantly higher this year, according to the LNG team at Thomson Reuters. Exports are expected to increase by 8 billion m3 this summer – which runs from April to September – compared to the same period in 2015.

According to Thomson Reuters, strong supply growth from new Australian projects and the start-up of US exports will result in significant supply overhand on LNG markets. Coupled with further convergence of Atlantic and Asian spot LNG prices, this will make Europe an increasingly attractive destination for LNG.

The increase of LNG imports into Europe will depress gas price hubs, improving its competitiveness with coal on the continent.

According to Anne Kat Brevik, Director of LNG at Thomson Reuters, this could see some further potential coal-to-gas switching in the UK and the Netherlands where coal-fired generation is more expensive as result of the UK’s high carbon tax and a coal tax in the Netherlands.

News is better elsewhere for coal however: “For the remaining Continental Europe, we do not foresee that gas prices will fall to a level so that gas will replace coal in the power sector at the current price for EUAs or emissions allowances,” Brevik added.

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