Bloomberg reports that Europe will need 10% more liquefied natural gas (LNG) in 2024, after Ukraine halted Russian pipeline transit when a deal expired. Without that supply, European importers must race to fill storage before any significant new LNG production comes online next year.
Europe Faces a Supply Deficit
For the first time since Russia’s war in Ukraine triggered an energy crisis, Europe risks failing to meet winter storage targets. Colder weather has already begun drawing down inventories, and the halt of Russian pipeline deliveries through Ukraine means fewer replacement options.
“There will definitely be an energy shortage in Europe this year,” says Francisco Blanch, a commodities strategist at Bank of America Corp. “All the additional LNG coming in globally will go to compensate for that lost Russian gas.”
According to MST Marquee energy analyst Sol Kavonic, Europe could need up to 10 million tonnes of LNG beyond its 2024 purchase levels—equivalent to a roughly 10% increase—to cover the shortfall. Though new export projects in North America are under development, any ramp-up in output will take time.
Intensified Competition with Asia
This dynamic places Europe into direct competition with Asia, the largest LNG consumer, making it more expensive for either region to secure needed volumes. Some developing economies—such as India, Bangladesh, and Egypt—already face difficulty affording pricier LNG cargoes. Germany’s nascent economic recovery could also be exposed if costs surge.
European gas futures remain around 45% higher than a year ago, while still trading at roughly three times pre-crisis levels. If Asian markets also tighten, “competition for cargoes” could further drive up prices, explains Jason Feer, global head of business intelligence at Poten & Partners.
Developing Countries Likely to Bear the Brunt
Analysts caution that Europe can typically outbid many emerging markets for cargoes, putting lower-income countries at risk of being priced out. During the 2022 crisis, certain developing Asian nations were forced to cut imports, raising concerns over energy shortages.
On the supply side, major LNG producers stand to benefit from higher prices. Some may boost output, similar to 2022’s expansionary push. Ogan Kose, a managing director at Accenture, notes that outcomes largely hinge on how quickly new export capacity ramps up, especially in North America.
U.S. Ramps Up Export Capacity
As the world’s top LNG supplier, the U.S. is poised to expand output by approximately 15% this year, says data firm Kpler, citing ongoing build-outs at Venture Global’s Plaquemines plant and an expansion at Cheniere’s Corpus Christi facility. However, the pace of commissioning is uncertain. Cheniere has warned that bringing plants fully online may be “relatively slow.”
Russia, still Europe’s second-largest LNG supplier, may also face headwinds after the U.S. imposed sanctions on two smaller Russian facilities. Meanwhile, Donald Trump’s presidency could influence market dynamics if he pushes U.S. exporters to exploit any price advantage—or if a potential Ukraine peace deal includes provisions on energy trade.
“Russian pipeline gas exports through Ukraine might eventually resume in 2025,” notes a Citi research team led by Anthony Yuen, if peace terms permit. Until then, Europe’s struggle to replenish its gas reserves without Russian pipelines suggests an unstable market, where both Europe and Asia vie for LNG supply—potentially prolonging high prices for everyone.
