US and EU announce deal to boost LNG supplies for Europe

The United States will supply more liquid natural gas (LNG) to the European Union to help it reduce its reliance on gas supplies from Russia, President Joe Biden said on Friday.

“Today we’ve agreed on a joint game plan toward that goal while accelerating our progress toward a secure clean energy future,” Mr Biden said in a statement.

“This initiative focuses on two core issues, one helping Europe to reduce its dependency on Russian gas as quickly as possible and secondly, reducing Europe’s demand for gas overall,” he said.

The agreement will see the US work to dleiver at least 15 billion cubic metres of LNG to EU states by the end of 2022.

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Under the agreement, EU member states will work to ensure demand for 50 billion cubic meters of US liquefied natural gas until at least 2030. LNG imports from Russia stood at around 14 billion to 18 billion cubic meters annually in the past years.

President Biden and European Commission President Ursula von der Leyen announced the pact – which includes the formation of a joint task force – ahead of an appearance together on Friday in Brussels following Mr Biden's meetings on Thursday with NATO, the Group of Seven and EU leaders.

Russian imports

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.

The country is aiming to halve imports of Russian oil by mid-year while rapidly reducing its dependency on the nation’s gas and coal, Der Spiegel magazine reported, citing an economy ministry paper. Russian gas could account for as little as 30 per cent of imports by the end of the year, down from more than half currently, while the aim is to reduce oil imports almost to nothing by then, the magazine quoted the paper as saying. Purchases of Russian coal should end by the early summer.

Currently, European buyers are competing with Asian countries for the world’s limited supply of LNG cargoes.

The issue is critical as Russia is the EU’s biggest natural gas supplier, accounting for more than 40 per cent 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.

However, the aspirational pact is light on detail, and the US 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 the joint task force – which will be chaired by a representative each from the White House and the European Commission – will be to diversify LNG supplies in line with efforts to combat climate change and to cut demand for natural gas.

Energy security

It will “work to ensure energy security for Ukraine and the EU in preparation for next winter and the following one while supporting the EU’s goal to end its dependence on Russian fossil fuels,” according to a white House fact sheet.

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 President Vladimir Putin forced an unprecedented re-think of the bloc’s energy strategy.

The additional imports from the US 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 US embassy in Germany is coordinating the meeting with the liquefied natural gas suppliers, expected to take place after the March 29th-30th 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.

Imports of the fuel from the US 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. - Bloomberg / Reuters