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Europe’s largest gas group is sounding the alarm over President Joe Biden’s moratorium on new liquefied natural gas exports, saying a moratorium could slow industrial activity and force factory closures, leading to tensions between leaders in Brussels and Washington. It warns that this could damage the relationship of trust.
These groups fear supply shortages could occur in the coming years, leaving them with few attractive options, such as buying more expensive supplies from far away in Qatar. It said it would reconsider the planned start date for the bloc-wide ban. It could even be forced to use Russian LNG or revert to dirtier fossil fuels such as coal in an emergency.
“The suspension could disrupt global LNG market trends, impact confidence in U.S. exports, and impact European import strategies and supply chains,” said Gas Infrastructure Senior Vice President Europe. Torben Bravo said. washington examiner In an interview.
“The complexities of this situation merit careful consideration, as any disruption to LNG supplies could have knock-on effects on Europe’s energy security and pricing,” he said.
The biggest impact will be felt from 2027. That is when the European Union’s proposed ban on Russian LNG imports will come into effect. But that’s also when most current EU contracts with U.S. LNG providers expire, said Fred Hutchison, CEO of the USLNG Association. washington examiner.
By way of background, the EU purchased around 4.89 million tonnes of Russian LNG in the first four months of 2024, relying on Moscow for 16% of its refrigerated natural gas, according to S&P Global data (compared to the same period last year). 12%). 2023. This will make Russia the second largest supplier after the United States.
Without another supplier to fill the void, the Russian outage will further increase Europe’s need for additional U.S. gas, which leaders say will depend on the length of the outage. I am concerned that this is a possibility. Concerns are that the long pause could mean that construction of US export terminals will not be completed in time, leaving Europe vulnerable as demand growth from other parts of the world, including Asia, is also expected to rise. That’s true.
Phasing out Russian gas “will make our lives even more difficult,” said James Watson, executive director of industry group Eurogas., said to washington examiner In an interview, he talked about the supply situation in Europe.
Much depends on how the United States responds, he said.
“We don’t have a crystal ball. We don’t know the future,” Watson said of the need for supplies from the United States. “But when supply is tight, that means higher prices, associated factory closures, and social negative effects such as people not being able to pay their heating bills are more likely to occur.”
Supply status
In the two years since Russia invaded Ukraine, industry groups have reduced gas usage, sending European gas futures prices to an all-time high of $371 per megawatt hour and prompting leaders to impose an economic blockade. I was forced to order a series of economizing measures to avoid this. Widespread shortages.
European countries have also begun investing heavily in new U.S. LNG projects and in regasification terminals, storage units, and other infrastructure needed to import large quantities of chilled gas.
As a result of these investments, LNG import capacity in the region is set to reach 406 billion cubic meters by the end of 2020, according to a report by the Institute for Energy Economics and Financial Analysis (IEEFA).
The United States will become the world’s largest LNG exporter in 2023. According to S&P Global, the EU currently imports 51% of its LNG from the US, compared to 16% from Russia, 10% from Algeria and 8% from Qatar.
Additionally, the United States has committed to supplying the EU with approximately 50 bcm of LNG per year until at least 2030, but there are growing concerns about how these concerns will combine with the expected demand growth in Asia after 2030. However, supply may become tight and European buyers may withdraw. In the spot market.
Additionally, the US supply of 50 bcm appears to be inconsistent with IEEFA’s forecast of European gas consumption of around 400 bcm by the end of 2020.
Within the next three years, Golden Pass, Port Arthur, Plaquemines and Next Decade LNG plants are scheduled to come online in the US, all of which will help the US meet demand from EU and Asian buyers until at least 2027. It is expected that it will be useful.
Hutchinson said the moratorium is expected to affect buyers “in the immediate years afterward.”
All told, five U.S. LNG export projects seeking extensions or new certifications are at risk of being caught in a moratorium, which could play an outsized role in determining the EU’s supply situation, officials said. are warning.
Click here to read the full Washington Examiner article
Lobbyists and industry groups say they fear Europe could find itself in a supply crisis by the end of 2010 unless there is substantial progress in decarbonization, or if demand for gas is reduced by more than the regional average. Says.
The White House and Department of Energy did not respond. washington examiner Request for comments.
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