Europe’s gas infrastructure binge is proving as ill-judged as it was expensive.
Europe’s dash to wean itself off Russian pipeline gas has left the continent with an embarrassing surplus of import capacity. After a frenzy of construction that saw 19 liquefied natural gas (LNG) terminals installed or expanded since early 2022, governments are now scrambling to shut down, mothball or quietly forget about infrastructure they insisted was vital for energy security. The about-face suggests that panic, rather than careful analysis, drove much of the investment.
According to the Institute for Energy Economics and Financial Analysis (IEEFA), a research outfit, Europe’s LNG regasification capacity grew by 13 per cent in 2023 and eight per cent in 2024. This year it will manage a meagre two per cent increase. Germany has already shuttered or shelved several terminals. In France, a court has ordered a floating storage and regasification unit (FSRU) to leave the port of Le Havre, where it has languished unused for over a year—an expensive ornament to poor planning.
The cause of this reversal is straightforward: European countries wildly overstated how much gas they would need. IEEFA expects the continent’s gas consumption to fall by 15 per cent between 2025 and 2030, with LNG imports declining by a fifth over the same period. The energy transition, combined with industrial restructuring and improved efficiency, is reducing demand faster than politicians anticipated. Those still building or expanding LNG terminals risk sinking money into infrastructure that will sit idle for decades.
Floating white elephants
The list of terminal woes grows longer by the month. Germany’s Mukran port FSRU stopped operations roughly a year after commissioning—a hasty decision that now looks foolish. Elsewhere, technical troubles have rendered a Greek terminal nearly useless, with a utilisation rate of just two per cent in the first half of 2025. Germany, meanwhile, has subletting an FSRU to Jordan after commissioning delays left it with surplus capacity. Such misadventures make a mockery of the LNG industry’s claim that terminals guarantee energy security. As Ana Maria Jaller-Makarewicz of IEEFA notes, reducing consumption has done far more to secure supply than building infrastructure nobody needs.
France’s Le Havre fiasco is particularly instructive. TotalEnergies, a French energy giant, commissioned the terminal in October 2023, only to watch it sit unused from August 2024 onwards. The court’s decision to evict the terminal cited both its abysmal utilisation and France’s falling gas consumption. It is a damning verdict on the assumptions underpinning Europe’s LNG buildout. Politicians eager to appear decisive after Russia’s invasion of Ukraine rushed to approve projects without considering whether demand would materialise. They are now discovering that voters are less forgiving of expensive mistakes than they are of short-term caution.
The American ascendancy
Europe’s pivot away from Russian pipeline gas has, predictably, benefited America. European imports of American LNG surged by 46 per cent year on year in the first half of 2025, with the United States now supplying 57 per cent of the continent’s LNG. This represents a remarkable shift in energy geopolitics, achieved in just three years. Russian gas, which once dominated European supply, has been replaced by shipments from across the Atlantic.
Yet Europe’s growing reliance on American LNG carries its own risks. The United States is a fickle supplier, prone to domestic political squabbles over energy exports. A future administration less sympathetic to European concerns could restrict LNG shipments or impose export levies. Moreover, American LNG is expensive compared with pipeline gas, pushing up costs for European households and industry. The continent has traded one form of energy dependence for another—hardly the outcome politicians promised when they embarked on their LNG spree.
The Russian paradox
Europe’s inability to quit Russian gas entirely adds a further layer of absurdity. Despite years of sanctions and rhetoric about energy independence, European imports of Russian LNG reached a record high in the first half of 2025, rising two per cent year on year. The European Union’s imports from Russia climbed even faster, up seven per cent over the same period, despite Brussels sanctioning Russian LNG operations. France, ever pragmatic, accounted for 41 per cent of Europe’s Russian LNG imports, followed by Belgium (28 per cent), Spain (20 per cent), the Netherlands (nine per cent) and Portugal (two per cent).
The EU has pledged to ban Russian LNG imports from January 2027, but its track record suggests scepticism is warranted. From early 2022 to mid-2025, EU countries spent roughly 120 billion euros on Russian pipeline gas and LNG—a tidy sum for a bloc supposedly cutting ties with the Kremlin. The discrepancy between Europe’s stated goals and its actions reveals the difficulty of replacing cheap Russian energy with costlier alternatives. Until the continent can reduce overall gas demand significantly, it will struggle to break free entirely.
Lessons in hubris
Europe’s LNG infrastructure binge offers several cautionary tales for policymakers elsewhere. First, panic is a poor basis for long-term investment decisions. The rush to replace Russian gas led governments to approve terminals without rigorous analysis of future demand. Second, energy transitions happen faster than politicians expect, particularly when high prices incentivise efficiency and substitution. Third, the LNG industry’s assurances about energy security should be taken with a generous pinch of salt. Terminals plagued by delays, technical issues and low utilisation hardly inspire confidence.
For Europe, the priority now is to avoid compounding past mistakes. Countries should halt new LNG terminal projects and focus instead on accelerating the energy transition through renewable deployment, grid infrastructure and energy efficiency. Investing further in gas infrastructure risks locking in emissions and costs for decades. The continent has already wasted billions on terminals it doesn’t need. There is little sense in throwing good money after bad.
The silver lining, if there is one, is that Europe’s gas consumption is falling faster than expected. Industrial restructuring, warmer winters and the shift to renewables have all played a role. With luck, the continent’s surplus LNG terminals will serve as monuments to a moment of collective folly—expensive, yes, but also mercifully brief. The sooner Europe moves past its gas obsession, the better.
Photo: Dreamstime.
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