US plans to boost supplies of liquefied natural gas to EU

The U.S. is completing a plan to supply the EU with up to an additional 15 billion cubic meters of liquefied natural gas by the end of 2022, according to three people familiar with the issue.

The agreement is intended to help the EU reduce its dependence on natural gas from Russia, with the bloc galloping to halt Russian imports by two-thirds this year.

LNG shipments from the US will move towards a target, set by the EU this month, of replacing 50 billion cm of gas currently supplied by Russia with alternative supplies. In 2021, the United States supplied Europe with 22 billion cm, according to EU data data.

US President Joe Biden and European Commission President Ursula von der Lane are hoping to announce the agreement on Friday morning. The White House declined to comment.

“This is another LNG from the US for the EU, thus replacing the Russian LNG we had so far,” von der Lane said on Thursday.

A European Commission official said the plan with the US would focus on ensuring EU security of supply in the short term, as well as increasing US production in the medium term and landing measures to curb consumption. This will include “concrete” data for shipments of LNG to the EU, the official added.

The EU is under intense pressure to prevent imports of Russian energy, but German Chancellor Olaf Schultz has warned of an immediate ban on fossil fuels in the country, saying such a move could provoke a recession.

Officials in Germany say a sharp drop in Russian gas imports this year will achieve the same goal as the sanctions.

The EU has set its plans to import an additional 50 billion cm of LNG from global manufacturers including the US, Qatar and Egypt this month, but some analysts have warned that the plan is unrealistic.

Sources who reported on the US plan stressed that the final amount of LNG to be supplied to the EU would depend on commercial contracts. A large portion of U.S. LNG sales are already committed to countries around the world, particularly in Asia, while its coastal gas liquidity terminals have operated close to maximum capacity.

“We think potential short-term measures will largely focus on reallocating supplies to Europe, rather than a real increase in U.S. LNG export volumes,” wrote Samantha Dart, an analyst at Goldman Sachs.

Mike Yarwood, a senior research fellow at the Oxford Institute for Energy Research, said Europe would have to settle to pay higher gas prices for many years to achieve its goals.

Europe’s available LNG import capacity is concentrated in the Iberian Peninsula, but Spain has poor pipeline connections to transport imported gas to northern Europe.

Eastern European countries most dependent on Russian gas lacking infrastructure easily benefit from LNG imports with adjacent terminals already operating at capacity, meaning they will struggle to increase imports much more.

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Separately, the U.S. Federal Energy Commission on Thursday Retreated backwards About new rules that would do that It is more difficult to build gas pipelines Against the background of the criticism that they will harm the industry at the same time as the White House is promoting exports to Europe.

Neil Chatterji, former FERC chairman, told FT the decision was made by “a combination of world affairs and bipartisan political pressure”.

“A complete and utter withdrawal of the committee,” he said. “I’ve never seen anything like it before. But it was the right thing to do.”

Another report by Harry Dempsey in London, Justin Jacobs in Houston and Miles McCormick in New York

US plans to boost supplies of liquefied natural gas to EU Source link US plans to boost supplies of liquefied natural gas to EU

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