Rising European LNG Demand Sparks Global Market Shift and Tensions with Energy Majors over Emission Laws

Europe’s ambitions to lead the global green transition are colliding with a new energy reality. As the European Union tightens its climate and corporate due diligence rules, major natural gas suppliers — including ExxonMobil and QatarEnergy — are warning they may scale back or even halt LNG sales to the bloc. The warnings come amid a sharp increase in Europe’s imports of liquefied natural gas (LNG), which have surged despite official pledges to reduce fossil fuel consumption.

The surge underscores Europe’s deepening dependence on LNG as a bridge fuel in its transition away from coal and Russian pipeline gas. But critics say that by imposing new environmental regulations on suppliers while simultaneously increasing LNG demand, the EU risks undermining both its energy security and diplomatic leverage.

Europe’s LNG Appetite Rewrites Global Energy Flows

Data from commodity analytics firm Kpler, cited by Reuters’ Clyde Russell, shows Europe imported over 101 million tons of LNG in the first ten months of 2025, a 16.7-million-ton increase from the previous year. The bloc’s imports rose even as its leaders continued to champion reduced gas consumption — a contradiction that has not gone unnoticed by global suppliers.

Asia, once the dominant buyer of LNG, has seen demand weaken, with total imports down 14 million tons year-over-year to 225.8 million tons. China’s purchases in particular have fallen every month since late 2024, partly reflecting its slower post-pandemic recovery and greater reliance on domestic coal and renewables.

The result has been a reversal of global demand dynamics, with Europe now driving price movements in LNG markets. However, this surge has come at a cost. Higher European demand has priced out lower-income Asian importers, while simultaneously burdening European consumers and industries already strained by elevated energy prices.

“Europe has become the epicenter of LNG demand, but at a fragile economic cost,” said Dr. Helena Korr, senior energy economist at the Centre for Strategic Energy Studies. “It’s paying a premium to keep the lights on while trying to legislate its suppliers into compliance — that’s not a sustainable balance.”

Suppliers Push Back Against EU Climate Directives

The EU’s Corporate Sustainability Due Diligence Directive (CSDDD) — set to take effect next year — has emerged as a flashpoint in the energy debate. The legislation would compel international companies doing business in Europe to track and report greenhouse gas emissions across their global supply chains, as well as monitor human rights standards.

Energy giants are pushing back. ExxonMobil has warned it may halt operations in the EU unless the bloc withdraws the directive, calling it “commercially unworkable.” Similarly, QatarEnergy, one of the world’s largest LNG exporters, has threatened to end shipments to Europe entirely if the legislation proceeds, saying the rules could expose it to fines of up to 5% of annual global revenue.

These threats highlight the geopolitical paradox facing Europe: it needs LNG to secure energy supplies and stabilize prices but is alienating key suppliers through regulation and legal mandates.

“The EU is creating a compliance wall around itself,” said Jean-Pierre Valois, a Brussels-based energy policy consultant. “The question is whether the bloc can afford to lose partners like Qatar and Exxon while U.S. LNG producers dominate the market.”

U.S. LNG Dominance Raises Strategic Concerns

The U.S. has quickly filled Europe’s growing demand gap. In the first half of 2025, American LNG accounted for 57% of Europe’s total imports, according to the Institute for Energy Economics and Financial Analysis (IEEFA). Germany and Greece were the most dependent, sourcing 94% and 84% of their LNG, respectively, from U.S. producers.

While this deepened transatlantic energy ties — bolstered by a Trump–von der Leyen trade deal committing to long-term purchases — it also sparked warnings of overreliance on a single supplier. The IEEFA cautioned that if European demand falls as renewables expand, countries locked into multi-decade contracts could face costly take-or-pay obligations.

Yet despite aggressive renewable energy targets, Europe’s actual gas usage has remained stubbornly high. Weak wind output forced Germany to rely on natural gas for a record share of its power generation this year. And with unpredictable weather and geopolitical volatility, analysts say Europe’s dependence on LNG may persist far longer than policymakers anticipate.

Outlook: Between Green Goals and Real-World Constraints

Europe’s simultaneous pursuit of climate leadership and energy resilience is increasingly difficult to reconcile. Policymakers must decide whether to prioritize regulatory purity or supply security, as both cannot advance at full speed simultaneously.

For now, suppliers are betting that the EU — facing a cold winter and slowing industrial output — will choose pragmatism over policy purism. But if Brussels doubles down on its corporate accountability agenda, energy trade tensions could escalate into a new front in global decarbonization politics.

“The EU wants to be both the regulator and the customer in the energy market,” said Korr. “But when the market pushes back, even Brussels will have to compromise.”