​Europe may have overstated its energy security strategy by rushing to expand its network of LNG terminals after Russia’s attack on Ukraine, a report says. Reuters analysis. If all the projects started are completed, the capacity of the LNG terminals will exceed the entire gas demand at the EU level. This is also in the context of EU policy to reduce gas demand to make way for renewable energy. Between the start of the war and August 2023, six LNG terminals were added to the existing network of 20.

Unlike other EU countries, Romania passively observes the expansion of the liquefied gas infrastructure in the EU. There were several ideas of involvement in such projects, but none were implemented, the Romanian state blocked the initiatives.

EU could double LNG terminals

Putin’s invasion of Ukraine caused an energy shock in the EU, due to which European states hurried to get rid of Russian dependence. Imports of Russian gas have fallen sharply over the past two years, eventually being replaced by liquefied natural gas, which is imported mainly from the United States.

Before the war in Ukraine, Russia exported 155 billion cubic meters of gas to Europe each year, which was about 40% of its total gas consumption of 412 billion cubic meters. In 2022, they decreased to approximately 60 billion cubic meters, and in 2023, they halved compared to the previous year and reached 28.3 billion cubic meters.

With the decrease in imports from Russia, terminals for the import of liquefied gas, mainly from the USA, began to increase. According to the Institute for Energy Economics and Financial Analysis (IEEEFA), from the beginning of the war until August 2023, six new terminals appeared, 21 already existing, which increased the capacity of liquefied gases by 36.5 billion cubic meters. By 2030, there may be 19 more terminals in the EU than in 2022.

If all current projects are completed, the EU’s liquefied gas import capacity could rise to nearly 350 billion cubic meters by the end of the decade, up from just 160 billion cubic meters in 2021, Reuters reported. While the total demand for gas in the EU will reach 340 billion cubic meters, which is 19% less than in 2021. This would mean that the entire liquefied gas capacity in Europe would exceed the EU’s required consumption.

Excessive infrastructure? Domestic production and pipeline imports will be added to the surplus of liquefied gas

To these volumes will be added gas imports through pipelines from Norway, North Africa and Azerbaijan, as well as domestic production, for example, in Romania. By 2030, the gap between Europe’s own production and pipeline imports compared to projected demand could be around 190 billion cubic meters (including the UK).

The EU will be filled with liquefied gas imports, but this is only part of the EU’s regasification capabilities. Excess infrastructure raises questions about the financial viability of all LNG terminals that will appear in the EU, writes Reuters.

Romania does not have a surplus problem as it does not participate in real LNG projects

Romania had the opportunity to join a project from Greece, a floating terminal FSRU (Floating Storage Regasification Unit) in Alexandroupolis, with a capacity of 5.5 billion cubic meters per year. The terminal may be commissioned on January 20 for trials, and if they go well, the commercial launch could take place in the first week of March. Gaza will reach the entire region, including Romania.

Romania could have been a shareholder in this project through Romgaz, but due to a wrong decision by the Ministry of Energy, it was taken out of the game and replaced by Bulgaria. In 2019, at the initiative of the then management of Romgaz and by the decision of the general meeting of shareholders, the purchase of 20% worth of 13 million euros of shares issued by Gastrade, which is developing the LNG terminal project in Greece, was approved, reports Digi24.ro.

In 2020, Romgaz’s board of directors, made up of people appointed by former energy minister Virgil Popescu, finally rejected the project, deeming it “out of date”. The place vacated by Romgaz was taken by the Bulgarians through Bulgartransgaz. The terminal is currently owned and operated by Gastrade, a consortium consisting of Bulgarian gas transmission system operator Bulgartransgaz (20%), Greek gas transmission system operator DESFA (20%), Greek gas company DEPA (20%), Greek infrastructure investor Copelouzos Group (20%) and Cypriot LNG shipowner GasLog (20%).

In addition to what Romgaz has tried and failed to do, another state-owned company, Transgaz, is targeting Greek projects. Last year, Transgaz negotiated participation in the ARGO liquefied gas terminal project in Volos. He would also try to take Romgaz’s place in Alexandroupolis, but he did not have the support of the Romanian government.

For many years in a row, the Romanian authorities have been considering the construction of an LNG terminal in Constanta, and there are even projects in this sense. In 2010, the AGRI (Azerbaijan-Georgia-Romania-Interconnector) project was launched, which provided for the construction of such a terminal for liquefied gases that would be imported from Azerbaijan. In a short time, the project dissolved and no one discussed this option of importing Azerbaijani gas until October 2022. Romgaz and Azerbaijanis from SOCAR signed a memorandum on the construction of a liquefied gas terminal in the Black Sea. But, as in the case of AGRI, the project remained at the level of a memorandum.

In the plan for the development of the national gas transportation system for the period 2020-2029, the terminal in Constanta was foreseen sometime in 2026, but there is no concrete data that it will be built.

Photo: Mischa Keijser / ImageSource / Profimedia