The U.S. and the European Union announced an agreement to try and boost the supply of liquefied natural gas to European countries by the end of 2022 with at least 15 billion cubic meters.
The aim is to work with international partners to help the continent wean itself off Russian fuel imports. Under the agreement, EU member states will work to ensure demand for 50 billion cubic meters of U.S. liquefied natural gas until at least 2030.
Europe imports most of its Russian gas via pipelines, with just a tiny fraction coming in the form of LNG. Russia ships about 150 billion cubic meters of gas to Europe via pipelines, with just about 14 to 18 billion coming in the form of LNG. That means any disruptions from Russia would hard to cope with.
“We’re coming together to reduce Europe’s dependence on Russian energy,” U.S. President Joe Biden said at a joint press conference with European Commission President Ursula von der Leyen, who added that 15 billion cubic meters this year “is a big step in that direction.”
The issue is critical as Russia is the EU’s biggest natural gas supplier, accounting for more than 40% of imports. The EU also relies on the country for the biggest share of its coal and oil imports, and has struggled to shift its energy policy away from Moscow.
In Berlin, Germany unveiled its own plan to dramatically reduce Russian fossil fuel imports and make the country almost completely independent of Russian gas by the middle of 2024. Currently, European buyers are competing with Asian countries for the world’s limited supply of LNG cargoes.
However, the aspirational pact is light on detail, and the U.S. did not immediately say which partners it would source new shipments from or by when — suggesting that final agreements aren’t yet in place with suppliers.
The primary goals of a joint task force — which will be chaired by a representative each from the White House and the European Commission — will be to diversity LNG supplies in line with efforts to combat climate change and to cut demand for natural gas.
The 27-nation bloc is aiming to replace this year nearly two-thirds of its total gas imports from Russia, which amounted to 155 billion cubic meters last year, after the war waged by Putin forced an unprecedented re-think of the bloc’s energy strategy.
The additional imports from the U.S. will take time to start, with Europe constrained by the current regassification capacity, number of terminals and interconnectors, according to an EU official, who asked not to be identified commenting on private talks
The transatlantic agreement comes ahead of a planned meeting in Berlin next week between American gas exporters and German buyers of the power-plant fuel. The U.S. Embassy in Germany is coordinating the meeting with the liquefied natural gas suppliers, expected to take place after the March 29-30 Berlin Energy Transition Dialogue conference, according to people familiar with the plan.
The new European energy strategy, outlined by the commission earlier this month, aims to replace 101.5 billion cubic meters of Russian gas in 2022 by tapping alternative supply sources, building up renewables and boosting energy security. It seeks to ensure 50 billion cubic meters in LNG from new suppliers.
“Should an interruption of Russian gas occur, the main challenge for Europe will be to refill its storage facilities ahead of next winter,” said Simone Tagliapietra, energy researcher at the Brussels-based Bruegel think-tank. “This would require record imports of liquefied natural gas this spring and the summer. The United States has an important role to play to support Europe in this eventual historical endeavour, being the largest liquefied natural gas exporter in the world as of this year.”
Imports of the fuel from the U.S. have risen exponentially amid the European energy crisis, which started a couple of months before the war amid limited flows from Russia. In 2021, transatlantic deliveries of LNG were at around 22 billion cubic meters. In January 2022, they stood at 4.4 billion cubic meters.