The Agency for the Cooperation of Energy Regulators (ACER) has released a report highlighting recent changes in the European LNG market and offering strategies to manage risks related to fluctuating prices and supply. With uncertainty surrounding the EU’s climate goals, future gas consumption remains unclear. LNG demand could vary by up to 90 billion cubic meters depending on whether the EU follows the Fit for 55 strategy or the more ambitious REPowerEU plan. If climate efforts stall, LNG demand may rise by 30 billion cubic meters by 2030.
Europe faces a difficult task of ensuring energy security through sufficient LNG imports while maintaining flexibility to avoid rigid long-term contracts in an evolving market. LNG now makes up around 40 percent of the EU’s gas supply, up from 23 percent in 2020. However, total LNG imports dropped by 17 percent from the previous year, totaling 112 billion cubic meters. Despite this decline, the EU remains the world’s largest LNG importer, ahead of China and Japan.
The United States continues to be the EU’s main LNG supplier, delivering nearly half of all imports. Russian LNG shipments to the EU increased by 22 percent, reaching 21 billion cubic meters, despite the EU’s updated REPowerEU roadmap to phase out Russian gas imports by 2027. This highlights the need for a diversified energy mix that avoids replacing one dependency with another.
In 2024, the EU purchased 30 billion cubic meters of LNG via the spot market, more than any other major buyer, and more than double the amount bought by China or India. ACER recorded over 550 spot deliveries, totaling 45.5 billion cubic meters. Over half of these were priced under 35 euros per megawatt-hour, reflecting a strong emphasis on cost-efficiency. The Title Transfer Facility remains the key pricing benchmark, used in 73 percent of spot deals.
ACER expects the EU’s reliance on spot LNG to continue unless there is significant progress in meeting REPowerEU emissions targets. To manage ongoing uncertainty and reduce vulnerability to supply shocks and price spikes, ACER recommends a dual strategy: accelerate decarbonization and increase LNG access through more flexible contracts. While gas use is expected to decline in the medium term, securing additional LNG via adaptable contracts can help stabilize prices in the short term. New contracts should either allow for flexible destinations or be of shorter duration.
ACER also advises energy stakeholders to focus on renewing or extending existing contracts through 2030, particularly those lasting one to five years, targeting an extra 20 billion cubic meters of supply. Working with portfolio suppliers able to offer 15 to 20 billion annually in uncommitted gas could provide the flexibility needed. Using spare capacity at liquefaction terminals not bound by long-term contracts is another way to boost supply.
Finally, ACER emphasizes the need for stronger coordination between EU member states and the European Commission. Improved data sharing and better monitoring will be essential to track progress toward decarbonization goals and enable timely policy actions.
