BAKU, Azerbaijan, October 20. Europe could
reduce its LNG imports by 20.8 billion cubic meters if shipments
through the Strait of Hormuz are delayed.


This was stated in a report by the Oxford Institute for Energy
Studies (OIES) titled “What Next for Hormuz LNG? Alternative
Scenarios.”


The report notes that a decline in demand and imports of
liquefied natural gas (LNG) will be the primary mechanism for
balancing the global gas market should restrictions on shipments
through the Strait of Hormuz persist.


According to the report, in a scenario where supplies resume in
October 2027, the supply shortfall will amount to 49 billion cubic
meters: “Other LNG exporters will increase supplies by 7.3 billion
cubic meters, of which 6.5 billion cubic meters will come from
Australia.”


“The remaining 41.7 billion cubic meters, or 85 percent of the
shortfall, will be offset by reduced demand and LNG imports. Europe
will account for a reduction of 20.8 billion cubic meters, China
for 6.6 billion, South Asian countries for 5.4 billion, and Middle
Eastern importers for 3.4 billion cubic meters.


If supply restrictions remain in place, the deficit in 2027 will
increase to 66.8 billion cubic meters. At the same time, additional
supplies from other exporters will total 15.6 billion cubic meters,
of which 13.3 billion will come from Australia.


In this scenario, the reduction in LNG imports will offset 77
percent of the shortfall. LNG imports to Europe will decline by
20.5 billion cubic meters, which is virtually equivalent to the
figure in the scenario where supplies resume in October 2027. The
reduction in China’s imports will reach 11 billion cubic
meters.


In the scenario where LNG supplies recover to 50% of pre-crisis
levels, the deficit will amount to 41.4 billion cubic meters, while
additional supply will total 12 billion cubic meters. LNG imports
will decrease by 29.4 billion cubic meters, or 71% of the total
deficit. Europe will account for a reduction of 12.2 billion cubic
meters, and South Asia for 5.9 billion cubic meters,” the institute
reports.







The report notes that Europe will bear the greatest burden of
balancing the market, even though the region typically imports
relatively small volumes of LNG from the Gulf countries: “In
Europe, the adjustment will occur primarily through a reduction in
gas injections into underground storage facilities in the summer of
2027, while the decline in actual consumption will be less
significant.”


"In other regions of the world, the main adaptation mechanism
will be a reduction in gas consumption. South Asian countries will
also be forced to cut imports, which could lead to a more active
shift toward coal and oil, as well as possible power outages.


Importers in the Middle East will lose 27–30% of their supplies
but will be able to partially switch to liquid fuels for power
generation and as feedstock for industry.


At the same time, Japan, South Korea, and Taiwan will reduce
imports by no more than 1.2% in 2027 under any of the scenarios
considered. The report attributes this to limited price
differentials and the ability to finance purchases.


Additional LNG supplies in the scenarios under consideration
will be provided primarily by Australia. According to the OIES,
this is because, in the baseline scenario, uncontracted volumes of
Australian LNG are displaced as supplies from the Middle East
recover. “In the alternative scenarios, the supply balance becomes
tighter, so these volumes are once again in demand,” OIES
reports.


Furthermore, it is emphasized that U.S. LNG exports in 2027 will
remain virtually unchanged, which is consistent with the current
situation, in which U.S. liquefaction plants are already operating
at full capacity.