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US, EU Seal LNG Deal To Undercut Russian Energy

The US and the EU have unveiled a deal to supply Europe with more US liquefied natural gas (LNG). This comes as leaders of the European bloc meet to curb their reliance on Russian fossil fuels and deal with an energy crunch.

The pact, announced during a visit by US President Joe Biden to Brussels, follows a day of three summits in the European Union capital whereby leaders lambasted Russia’s invasion of Ukraine and offered fresh support to Kyiv.

“We’re coming together to reduce Europe’s dependence on Russia’s energy,” Biden said. “We should not subsidise Putin’s brutal attack on Ukraine.”

The invasion by Europe’s top gas supplier has pushed already-high energy prices to records and prompted the EU to pledge to cut Russian gas use by two-thirds this year by hiking imports from other countries.

The US and other nations will increase LNGs to Europe by 15 billion cubic metres (bcm) this year. The longer-term aim would be to ensure, until at least 2030, about 50bcm per year of additional US LNG, a White House factsheet said.

Although the initiative is likely to require new facilities for importing LNG, they also geared the partnership toward reducing reliance on fossil fuels in the long run through energy efficiency and alternative sources of energy, according to the White House.

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Biden will discuss the issue with Ursula von der Leyen, head of the EU’s executive arm, before leaving for Poland, the last leg of his four-day trip. Earlier this week, von der Leyen said: “We are aiming at having a commitment for additional supplies for the next two winters.”

Jake Sullivan, Biden’s national security adviser, recently told reporters that the administration wants to quickly “surge” gas to Europe.

Getting more LNG to Europe could also be difficult, even though the US has been dramatically increasing its exports in recent years, experts have said. Many export facilities are already operating at capacity, and most new terminals are still only in the planning stages.

Most US shipments already go to Europe, according to the industry lobbying group Centre for Liquefied Natural Gas. Although much of the supply is already contracted out to buyers, there are still opportunities to shift its destination.

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“The US is in a unique position because it has flexible LNG that can be rerouted to Europe or to Asia, depending on who’s willing to pay that price,” said Emily McClain, gas markets analyst at Rystad.

EU leaders will today (25 March) discuss what more they can do to rein in high energy bills. Spain, Greece, and others will make their case for power price caps and market intervention, while a group that includes Germany and Netherlands will push back and seek to delay such moves, diplomats said.

The divisive issue of whether to impose an embargo on Russian energy, on top of the slew of sanctions already targeted at Moscow, will also come up, but they don’t expect to reach a decision on this matter.

The 27 leaders will also commit to start jointly buying gas and filling storage ahead of next winter to build a buffer against further supply shocks.

Source: E&T

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