November 22nd, 2020: The unpredictable pop in energy prices and intermediate cuts in gas imports from Russia in recent years has led to worries regarding the reliability, depth, security, and affordability of gas supply requirements for the EU.
Supplying LNG through shipping has been considered a viable solution over the last 10 years. LNG is a top, rapidly growing energy source for the world. Read more from TRS Staffing.
The JRC Institute for Energy (IE) has produced the JRC Reference Report, titled Liquefied Natural Gas for Europe – Some Important Issues for Consideration. It researches the advantages and cons of the European Union’s growing adoption of LNG imports by 2020 in five segments
Table of Contents
Reliability and mix
15% of EU gas imports are LNG based and help in achieving a dependable mix and meeting energy sufficiency goals. However, increased reliance on LNG imports can be counterproductive since supply is tightly controlled by a few countries the EU has to rely on.
The report outlines that the newly established Gas Exporting Countries Forum (GECF) -which has huge sway in the industry, controlling about 85% of the current LNG supply – poses significant risks in dictating global supply.
Complexity and budget overruns are normal in large LNG projects thus the EU is susceptible to increased energy prices if it continues to expand its usage of LNG. The cost of supplies is thus a significant factor that will shape the EU’s fuel composition decisions on LNG.
Greenhouse gases and eliminating energy wastage
Due to the additional processing activities, LNG supply infrastructure is likely to use greater energy and greenhouse gases as compared to pipeline gas. The margin is smaller when LNG is contrasted with remote pipeline supplies.
Generally, the greenhouse gas performance spread is lower than the energy efficiency spread due to the inevitable methane leakages from pipelines. In specific conditions, with regards to greenhouse gases, LNG is the best as opposed to pipeline supplies.
For instance in a case of remote pipeline supplies of gas or in cases where LNG is delivered in liquid form to the end-users then re-gasified.
LNG is of greater standard when compared to pipeline gas since it is cleaner, has a greater energy and methane content, and features a more robust mix. But, the higher-quality LNG that is more costly when you consider greenhouse gas emissions and energy costs, poses a challenge in the EU currently.
The problem is that a majority of EU end-user infrastructure is created for the poor quality pipeline gas that is mostly consumed in the market today.
Since EU gas imports are likely to increasingly favor LNG moving forward, Europe might have to conduct improvements to its gas quality standards or consider customized LNG applications, for instance as a transportation fuel, however, this is not guaranteed.
Cost of Shipping
LNG shipping charges are usually the most unpredictable portion of the total LNG supply process and heavily impact the competitiveness of LNG products. Although a greater number of vessels might be required to satisfy demand, LNG will hardly lead to increased shipping congestion, except for if exceedingly strict security and safety standards for managing LNG carriers are enacted.
Most likely these vessels will have to deal with a limited number of skilled crews. But, on the other hand, LNG vessels will require maintenance, thus they will provide job opportunities to shipyards, particularly in Europe’s south.