The AI boom is making natural gas great again. As global climate ambitions falter and artificial intelligence drives a race for power, gas is regaining political and commercial appeal in a fast-moving push to generate power directly at data centres.
Grid congestion, long lead times, and surging data centre loads mean energy policy – not venture capital – will shape who leads the global AI race.
Shell sees natural gas demand rapidly rising into the 2040s under a scenario of robust economic growth and coal use decreasing across Asia. Natural gas will take on a transitional role in the scenario for Asia until around 2045.
Over the next two years, available LNG export capacity is expected to grow by some 113bcm from 593bcm in 2025 to 707bcm in 2027, leading to excess of supply over demand putting downward pressure on prices.
Chevron reached final investment decision stage (FID) to expand Leviathan production in Israel for export to Egypt. By 2028 total gas delivery will be increased to about 21 bcma year from 9 bcm/yr now.
Egypt and Chevron set a March deadline for Aphrodite gas connection terms. The key is “ensuring mutual economic benefits for Egypt, Cyprus and the investing partners,” particularly agreeing a price for this gas.
Egyptian natural gas started heading to Lebanon and Syria. Egypt is delivering some 50 million cf/d of gas to each of the two countries through the Arab Gas Pipeline and supplies will double during the winter months.
Chevron and Qatari investors have signed an MoU to enter Syria’s offshore oil and gas exploration, while further north, Chevron and the Turkish Petroleum Corporation (TPAO) sealed a deal to embark on oil and gas exploration in the Black Sea.
A 2026 global LNG output surge is set to ease prices and supply constraints. Global supply is expected to rise to as much as 484 mln tons in 2026.
Europe cautious on American supplies
The EU swapped Russian for American energy dependency. Today, the US accounts for about 16% of oil and approx. 45% of its LNG imports. Analysts say that the US could supply 80% of its LNG imports by 2030. Given the deteriorating political situation, this is becoming of great concern.
American LNG was meant to be a safe alternative to Russian gas for the EU. With transatlantic relations in crisis, that’s no longer a given.
The IEA said that Europe is expected to import a record 185 bln cubic metres of LNG in 2026, up from a previous record 175 bcm in 2025.
The Greenland crisis is forcing Europe to seek energy security elsewhere, as the surge in US imports now constitutes a strategic vulnerability.
It has also hardened Europe’s push for energy independence. Nine countries agreed to build joint offshore wind projects and cables in the North Sea.
Meanwhile, below-average winter temperatures are driving the fastest pace of withdrawals from natural gas storage in Europe in five years, as heating demand is rising.
EU gas storage levels have officially fallen below the 50% mark, while consumption across the continent remains very high due to the cold weather, depleting storage faster than normal. This could pose a risk to the EU’s energy security.
European LNG imports smashed through 600 mln cm/d so far in January. France and the UK are seeing the biggest surge, followed by Germany. At 620 mln cm/d, year-on-year imports are up a hefty 19% with Europe using LNG to supplement its low storage situation due to the cold weather.
Because of its depleted LNG storages, Europe will import record volumes of LNG this year, deepening its reliance on the volatile global market.
Central and southeast Europe countries are building a gas highway from south to north – the Vertical Gas Corridor – starting in Greece and going to Ukraine to achieve Europe’s goal of complete independence from Russian gas by the end of next year.
The EU is tightening control over gas from Turkey and Azerbaijan due to the risk that this has Russian origin and circumventing sanctions.
US ambassador Kimberly Guilfoyle confirmed that “Greece is swiftly becoming a key US LNG gateway to Europe”.
Eni’s Cronos Development in Cyprus may add new gas volumes to Europe by end-2027 or early-2028. LNG exports through Eni’s Damietta plant in Egypt are expected to reach 5 bcm/yr.
IMF Managing Director Kristalina Georgieva issued a stark warning to European leaders: “Get your act together.”
She argued there are four things the continent’s leaders must do to regain competitiveness and influence: complete its capital markets and energy unions, ease cross-border labour mobility and invest more in research and innovation.
At the same time, the EU chemicals industry is calling for “an urgent reform of the EU ETS to align climate ambition with competitive reality” or risk disappearing.
Europe’s chemical industry is collapsing under energy costs and regulation. Investment in the sector shrank by 80% in 2025, while capacity closures hit 37 mln tons with 20,000 job losses, threatening downstream industries.
In addition, in a joint statement, 12 bodies representing the EU’s most energy-intensive industries, said production levels across their sectors have declined by up to 40% in 2025, compared to 2018.
European countries have led the push for net-zero economies for over a decade. But with that they have outsourced most high-emission activities, and these activities are now powering whole economies.
A new report states that the EU is struggling to maintain support for ambitious climate action among its own member countries, owing to disagreements between governments.
European governments and corporations are racing to reduce their exposure to US technology, military hardware and energy resources as transatlantic relations sour.
Draghi said Europe needs to become a ‘genuine federation’ to avoid deindustrialisation and decline. He warned that the EU risks subordination, division and deindustrialisation all at once if it does not pull closer together.
Draghi also said EU countries shouldn’t be afraid of integrating at different speeds if that’s what it takes to gain crucial leverage on the world stage. Europe must choose between being a group of fragmented nations or a real European power.
Europe is replacing dependence on Russian gas with rising reliance on US LNG and Chinese clean tech. Berlin now warns US energy dominance, alongside China’s tech grip, could pose “systemic risk,” with energy sovereignty back at centre stage.
Dr Charles Ellinas, Councilor, Atlantic Council
X: @CharlesEllinas
