The European LNG market is not currently sending the price signals needed to attract additional LNG cargoes, despite storage levels remaining well below last year’s levels. According to this analysis, narrow onshore-offshore price spreads are reducing the incentive to regasify LNG, leaving Europe with subdued imports and slower storage injections heading towards winter.
The premium of onshore gas hub prices over offshore LNG prices dictates economics for regasifying LNG into a European terminal. When the spread is wide, terminals run at higher utilisations as variable costs to regasify a cargo are more likely to be covered.
As shown on the chart, the opposite is currently true, with onshore-offshore spreads collapsing to multi-year lows. This suggests European LNG sendout across late Summer will remain somewhat subdued.
The puzzle is that this signal of subdued LNG imports is happening despite Europe already struggling to fill its underground storages, with underground stocks sitting around 10 bcm (-10%) lower year-on-year and looking increasingly unlikely to meet the EU’s already relaxed 80% refill target.
Weak European LNG imports reflect strong competition with Asia for spot cargoes amidst further disruptions to Qatari supply. For Europe, a backwardated TTF curve reduces the incentive to buy and inject gas over summer, keeping refilling demand muted.
However, as LNG imports remain weak, injections will continue to be weak, leaving storage buffer thinner heading into winter. Longer imports stay subdued, more scarcity risk should build winter, lifting prices relative to summer, thereby reducing curve backwardation.
Source: Timera Energy, Published: 23 July 2026
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