Europe imported 2,121 million tonnes of liquefied natural gas (LNG) in 2022, a 60% increase compared to 2021.

But the main part was procured on the spot market, and this meant that expenses for LNG imports tripled in 2022 to almost EUR 190bn, writes Euractiv.

According to analysts, Europe represented more than a third of all trades in the global spot market in 2022. The share totaled 13% in 2021.

But to avoid that natural gas prices explode again next winter, prices need to go down, entailing that way more long-term contracts have to be made in relation to LNG trades.

According to Morten Frisch, senior partner at Morten Frisch Consulting, Europe needs to get around 70-75% of its LNG via long-term agreements.

”But since the green lobby in Europe has managed to persuade politicians wrongly that hydrogen to a large extent can replace natural gas as an energy carrier by 2030, Europe has become far too reliant on spot and short term purchases of LNG,” says Frisch to Euractiv. 

According to another source that Euractiv has spoken to, it’s too difficult for European utilities to interpret the signals coming from national governments. They don’t know whether a ban on natural gas will be introduced in 2030 or in 2040, and this makes them way too dependent on the spot market, argues the source.

Large LNG producers and negotiators such as QatarEnergy typically aim for 25-year-long supply contracts, and such a duration does not fit well with the EU’s climate targets, Euractiv writes.