In simple terms: Europe’s consumption of natural gas is increasing, and its domestic production is falling. Its imports have risen rapidly in recent years, and will most likely increase further in the future.
“The question is: Where will these increased imports come from?” said Marco Alvera, chief executive of SNAM, an Italian natural gas infrastructure company.
Many of the region’s power plants are switching from being fired by coal, which has high levels of carbon emissions, to running on gas, which is significantly better for the environment (though not entirely clean).
But gas production in Europe is declining. One major reason is that the Dutch government ordered a sharp reduction of output at the enormous Groningen field, because of earthquakes caused by exploration there.
And some other sources may be near maximum capacity. Pipeline gas, the main source of Europe’s gas imports, might have peaked, especially from sources like North Africa, our analysts say.
L.N.G., a chilled form of natural gas sold by the United States that can be transported on ships to any place with a specific type of terminal, offers another option. Europe already has several such terminals in place — in fact, it is using less than half their available capacity.