EU weighs LNG’s pros and cons

Is liquefying gas and transporting it in tankers a viable alternative to relying on pipelines?



The gas dispute between Russia and Ukraine has focused minds in the EU not only on building new pipelines to diversify sources of energy, but also on increasing the EU’s use of liquefied natural gas (LNG). Shortages in Bulgaria, the EU country worst affected by the dispute, were mitigated by LNG shipped to Greece and piped from there. The European Commission says that the crisis shows the relevance of the action plan for  ‘energy security and solidarity’ that it presented in November, which called for member states to improve their access to LNG. Despite LNG’s strategic advantages, any attempt radically to increase its use poses formidable difficulties for energy companies and EU policymakers.

Cool liquid

LNG is created by treating natural gas, giving it a greater concentration of methane and then cooling it into liquid form. It is transported, still cooled, usually by boat, from supplier countries and converted back into gas at purpose-built terminals. In 2007, LNG accounted for only 13% of the EU’s imports of natural gas (the rest travels to the EU through pipelines). The EU’s main supplier is Algeria, which provides 34% of all imported LNG, followed by Nigeria (18%) and Egypt (15%). The use of LNG varies widely between different member states. Spain, the number-one consumer, relies on it to meet 70% of its gas needs. France is in a distant second place, while 20 EU countries do not generally use LNG at all.

LNG advantages

Both energy companies and the Commission see advantages to be gained from increasing the EU’s use of LNG. The energy companies are planning investments in new LNG terminals to take advantage of falling transport costs. There are currently 13 LNG re-gasification terminals in Europe, six of which are in Spain and three in the UK. A further nine are under construction, while proposals for another 25 are “at an early evaluation stage or under study” according to Gas Infrastructure Europe, an association representing LNG terminal operators. Several projects to expand existing facilities are also in progress. According to industry estimates, the share of LNG in the EU’s gas imports will rise to 20% by 2020. The European Commission plans to produce an LNG action plan later this year.


Jean-Marie Devos, the secretary-general of Eurogas, the European gas industry association, says: “The Russia-Ukraine dispute clearly created a better climate for and acceptance of more development of the LNG industry.” He argues that LNG adds “flexibility” to the EU’s gas supply and that “it will have a growing role”. He says, however, that pipelines still have advantages, not least because of “the relatively huge investments” needed to develop LNG infrastructure and unstable world energy prices. He says that any proposals from the Commission should be based on both security of supply considerations and sound economic analysis, adding that “industrial operators will have to take the appropriate investment decisions”.

Environmental challenges

LNG also presents environmental difficulties. Transport of LNG is significantly more polluting than using pipelines, because of the energy needed to liquefy and transport it. Policymakers seeking to increase uptake of LNG therefore need to find a balance between promoting energy security and working towards the EU’s target of reducing greenhouse gas emissions by 20% by 2020.

Taken together, these practical difficulties mean that, although LNG’s share of Europe’s energy mix is almost certain to increase, it is unlikely to be the EU’s energy-security panacea.