The construction of LNG terminals in the U.S. is booming, but is Europe's reduced gas demand a cause for concern? European gas demand is expected to continue declining due to factors such as renewables deployment and energy efficiency programs. However, the U.S. is still building more LNG terminals, with projected export capacity in 2030 76% higher than Europe's forecasted demand. This raises the question of whether there is a risk of overinvestment in LNG projects.

Europe's energy situation has drastically changed since Russia's invasion of Ukraine in 2022. The European Commission launched the REPowerEU Plan to reduce fossil fuel dependency, increase renewables deployment, and diversify energy sources. The implementation of this plan has led to a shift in the energy supply mix, with LNG imports accounting for a larger share.

European gas demand has significantly declined over the past two years due to various policies and programs aimed at reducing consumption. If these efforts continue, gas demand in 2030 is expected to be below 400 billion cubic meters. In addition to reducing demand, Europe has also focused on diversifying its LNG imports, with the main sources being the U.S., Qatar, Russia, Algeria, and Nigeria.

On the other hand, Wood Mackenzie projects that at least 90 million tons per annum of LNG will be needed to meet growing global demand by 2035. However, most of the supply currently under construction will not be available until 2026, meaning buyers will continue to face high and volatile prices in the coming years.

Overall, the question remains whether the current boom in LNG capacity will be sustainable or result in overinvestment, given the declining gas demand in Europe and the timing of new supply coming online.