Article - October 2009 Issue

European LNG imports amounted to 43 million tonnes in 2008, about 25% of the world’s total. Although Europe was the birthplace of the world LNG industry, Asian markets outstripped Europe in growth through the 80s and 90s. If it were not for LNG demand in Spain – which now makes up half of European LNG demand – European LNG would have shown relatively little growth over the last ten years. This picture may change in the future. Major import terminals have been commissioned this year in the UK and Italy, and new capacity is under construction or planned in Spain, France, Croatia and the Netherlands. And with the well-publicised “surge” in LNG production imminent, there may be no shortage of LNG to feed these terminals. This resurgence in European LNG comes at a time when an increasing number of observers think that Europe may be at a “tipping point” between the traditional use of long-term oil linked contracts to a contract basis where traded prices predominate. LNG Business Review examines the potential consequences of these parallel developments and poses the question whether LNG can act as a key catalyst in precipitating an acceleration in the liberalisation of European gas markets.