In 2017, the US has been only the sixth largest LNG supplier to Europe. However, this constitutes a substantial increase from its 2016 market share of overall LNG imports of 0.6% to over 5%. Moreover, US LNG export capacity is set to increase further over the next few years. This, in turn, means that US LNG will over time play an increasingly important role in European gas price determination.
In this paper, we:
- set out the potential scale of US LNG exports relative to European import demand;
- explain the dynamics behind US LNG pricing, which will introduce a significant “step” into the European supply curve as US LNG export terminal utilisation increases; and
- conclude that competing US LNG will increasingly constrain European gas prices.
To read the paper, click the link below.