Asia and Europe compete for LNG; Russia’s gas advantage begins to emerge

A higher premium means Asian buyers are willing to pay more to secure cargoes. This price differential is now sufficient to cover the additional shipping costs incurred by rerouting U.S. LNG to Asia—and on average exceeds those extra freight costs by $0.5 per million British thermal units (MMBtu). Once this arbitrage window opened, an increasing number of U.S. LNG vessels began diverting to Asia. Data shows that the share of U.S. LNG shipped to Asia surged from 6% in February to 25% in April. This has led directly to a sharp decline in spot LNG availability for Europe. II. Europe’s Natural Gas Inventory Crisis Europe’s current position is highly precarious. First, consider inventory levels. As of mid-May, European natural gas inventories stood at approximately 35–36%, significantly below the five-year average of roughly 45% for the same period. The latest data indicates that as of May 14, European gas inventories stood at 35.85%, down 7.51% year-on-year. Recall that Europe just endured its highest-consuming winter in nearly a decade. Low inventories mean urgent replenishment pressure—and now Asia, too, is competing aggressively for LNG, further narrowing Europe’s procurement window. Compounding the problem, U.S. LNG production capacity is not infinitely adjustable. Since the Strait of Hormuz disruption, U.S. LNG has been counted on heavily. Data suggests Europe may source two-thirds of its LNG supply from the U.S. by 2026, and up to 80% by 2028. Yet Goldman Sachs recently downgraded its forecast for effective U.S. LNG supply this summer by 5 million tons per year. The issue isn’t U.S. production capacity—it’s logistics efficiency. More vessels have been redirected to the more distant Asian market, extending average transit time from 17 days to 23 days. The longer ships remain at sea, the less cargo actually reaches the market. III. Russian LNG Fills the Gap It is precisely against this backdrop that European imports of Russian LNG have risen—not fallen. Relevant data shows that in Q1 of this year, the EU imported 6.9 billion cubic meters of LNG from Russia, up 16% year-on-year—the highest level since the Ukraine crisis erupted in 2022. Import volumes continued rising in April, up 17% year-on-year. Russia is now the EU’s second-largest LNG supplier—behind only the U.S.—with a market share of about 13%. Key buyers include France, Spain, and Belgium. France’s figures are especially striking: in Q1, 35% of France’s LNG imports came from Russia, accounting for 41% of all Russian LNG imports into Europe. Why, despite the political unacceptability, does Europe still buy? Because Europe’s shift from pipeline gas to LNG was originally intended to enhance supply security and diversification—but Middle Eastern conflicts disrupting supply, coupled with overreliance on U.S. LNG, have left this strategy failing on both fronts. Russian LNG holds inherent advantages: geographical proximity, low transportation costs, and competitive pricing. Amid Europe’s urgent need to replenish inventories—and amid globally expensive, hard-to-source spot LNG—Russian gas has become a pragmatic choice. This choice is politically fraught: the EU has set a timeline to fully ban Russian gas imports by 2027. Yet, for now, buying Russian gas remains an existential necessity.

The U.S. natural gas situation: a tale of fire and ice

As the world’s largest liquefied natural gas (LNG) exporter, U.S. LNG exports reached record highs in the first eight months of 2025, driven by robust demand from domestic industrial consumers and European buyers. Cheniere Energy—the largest U.S. LNG exporter—saw its earnings surge 85% in Q2 2025. Since 2016, U.S. LNG export volumes have grown annually—from 0.5 billion cubic feet per day (bcfd) in 2016 to 11.9 bcfd in 2024. In both 2023 and 2024, the U.S. became the world’s top LNG exporter. As of mid-August 2025, U.S. LNG exports again hit a new record. According to Kpler data for the week ending August 17, 2025, U.S. LNG exports from January through August 2025 rose 22% year-on-year versus the same period in 2024, reaching 69 million tons—12.4 million tons more than U.S. LNG producers exported in all of 2024. As the largest buyer of U.S. LNG, Europe saw its imports from the U.S. surge 61% year-on-year in the first eight months of 2025. Europe appears to have purchased virtually all U.S. LNG it could access. This sharp increase stems from several factors: severely depleted gas inventories at the end of the most recent heating season, necessitating aggressive restocking; reduced output from wind and hydroelectric power generation; and the EU’s commitment to purchase more U.S. energy to narrow its trade surplus with the United States. Month-by-month, U.S. LNG exports hit record highs: 9.3 million tons in April 2025, 8.9 million tons in May, and 8.4 million tons in June. The dip in June exports resulted from scheduled maintenance at two major LNG export facilities operated by Cheniere Energy—Sabine Pass and Corpus Christi—which together produce 6.9 bcfd of LNG; additionally, the Cameron LNG project in Louisiana also underwent maintenance in June, further reducing total U.S. LNG export volumes. By destination, Asian demand for U.S. LNG declined in the first half of 2025 due to rising prices and economic slowdown triggered by the tariff war initiated by former President Trump. According to London Stock Exchange data, Asian LNG imports fell by 16 million tons from January to June 2025. In May 2025, U.S. LNG exports to Asia totaled 1.88 million tons—just 21% of total U.S. LNG exports that month. In the first half of 2025, Europe continued purchasing U.S. LNG regardless of price, driven by the imperative to refill storage facilities. In May, Europe received 6.05 million tons of U.S. LNG—68% of total U.S. LNG exports that month; in June, Europe imported another 5.53 million tons—66% of total U.S. LNG exports. Beyond record export volumes, the extraordinary strength of the U.S. LNG export sector in 2025 is also reflected in corporate performance.

US LNG Exports Rise in September as Europe Outbids Asia for Cargoes, LSEG Data Show

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US liquefied natural gas exports reached 10.9 million metric tons in September, driven by strong European demand and elevated prices. Europe accounted for 54% of shipments while Asian imports also increased due to robust regional pricing.

reuters

2026-10-01

US LNG Exports Rise in September as Europe Outbids Asia for Cargoes, LSEG Data Show

US LNG Exports Rise in September as Europe Outbids Asia for Cargoes, LSEG Data Show

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