19:11 GMT29 November 2020
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    On July 30, US President Trump announced that EU countries would build from 9 to 11 gas terminals to accept deliveries of US liquefied natural gas (LNG). Speaking to Radio Sputnik, Francis Perrin, a senior research fellow at IRIS, the French Institute for International and Strategic Affairs, shed light on the prospects for gas demand in Europe.

    Sputnik: Who will pay for the infrastructure required to accept deliveries of US liquefied natural gas (LNG) in Europe and how much would it cost? 

    Francis Perrin: It will cost much, as always in the energy world. And, of course, the LNG industry and LNG business is much more expensive than importing natural gas by pipelines, because in the LNG business you need, first, a liquefaction plant in exporting country, you need fleet of tankers to transport the LNG, liquefied natural gas. And at the arrival in the importing country, you need a terminal, an LNG terminal, and the LNG must be re-gasified in order to be transported by gas lines to reach the final consumers.

    READ MORE: No More Than 4 New LNG Facilities Will be Built in EU Anytime Soon — Researcher

    So it's expensive industry, but it has a great advantage in terms of security of supplies. When you have an LNG terminal, you are able to import LNG from several countries. With a gas line you can only import gas from the exporting country. And so, for the past few years, the European Commission has encouraged the European countries to develop LNG terminals in order to increase the security of their gas supplies. But the cost will be high, it will be paid by energy companies, gas companies, oil companies, and, of course, by the gas consumers, because at the end of the day the oil and gas companies which will build these LNG terminals will pass the costs on to the consumers, as always.

    READ MORE: Trump's Wishful Thinking: Why EU is Unlikely to Become 'Massive Buyer of US LNG'

    Sputnik: Is it likely that American liquefied natural gas will be in demand for European clients?

    Francis Perrin: There is a demand for gas within the European Union, but this demand is not very dynamic. Why? Because natural gas in Europe is not, as far as we are speaking it can change, of course, is not I would say, a favored energy source. We have renewable sources, especially solar energy [and] wind energy, which are heavily subsidized by several European countries, especially Germany, but not only this country, and which are encouraged by the European Commission because of environmental issues, climate change issues and so on.

    READ MORE: LNG Suppliers Try to Force EU to Purchase More Expensive Gas — Kremlin

    You have coal, which is not, of course, very clean energy, but which remains very competitive in terms of costs. In some countries, such as France, you have nuclear power. In France nuclear power is the source of about 72-75 percent of all the electricity generated in the country. So, gas is squeezed between the competitiveness of coal and the rise of renewable energies, especially solar and wind, which are subsidized by several member countries of the European Union. So, there is a gas demand, of course, but it's not a growing gas demand so far. The hope for the gas industry is that as European gas production, domestic production, is declining — the North Sea, the Netherlands — Europe will need in the future more gas imports, even if its domestic gas consumption is not rising much and in fact even if this demand is not rising at all.  


    The views and opinions expressed by Francis Perrin are those of the speaker and do not necessarily reflect those of Sputnik.

    The views and opinions expressed in the article do not necessarily reflect those of Sputnik.


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    LNG terminals, European energy security, Russian natural gas, natural gas, liquified gas, gas pipeline, solar energy, European Commission, Donald Trump, Germany, Europe, US, Russia, France
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