France risks unnecessary investments in new LNG infrastructure as the utilisation rates of existing terminals decline and gas use falls, according to new research from the Institute for Energy Economics and Financial Analysis (IEEFA).
The average utilisation rate of France’s operational LNG import terminals was 60% between January and August 2023, down on last year’s rate of 74%, raising doubts about the need for the new FSRU that recently arrived at the port of Le Havre.
With a regasification capacity of 5 billion m3, Le Havre FSRU is expected to be operational for the next five years.
Despite gas use declining 9% in 2022 due to higher prices and lower consumer consumption, France is also considering increasing the capacity of operational LNG terminals and international gas pipelines.
“Gas and LNG infrastructure is currently at risk from falling demand and high and volatile prices,” said Ana Maria Jaller-Makarewicz, author of the report and an Energy Analyst at IEEFA. “If demand continues declining, France and neighbouring European countries risk investing in gas infrastructure that will fail to improve security of energy supply and could become underutilised.
“Although France has advocated for investing in projects that improve European security of supply while reducing Russian gas dependency, paradoxically Russian gas is finding an alternative way to reach French ports in the form of LNG.”
While the stated aim of the Le Havre terminal is to partially offset the reduction or cessation of gas supplies from Russia, France continues importing Russian LNG and allowing transshipments destined for other markets.
Under a 23-year deal signed in 2015, energy company Engie imports 1 million tpy of LNG from Russia’s Yamal LNG project for transhipment at the Montoir-de-Bretagneterminal on France’s west coast. Yamal LNG transhipments at Montoir-de-Bretagneincreased 150% y/y in 2022, and 2023 is expected to follow that trend.
The US was the top exporter of LNG to France in 2022, followed by Russia, Algeria, Qatar, and Nigeria, according to Kpler.
