Thursday

28th Mar 2024

More US gas may explode prices in Europe, experts warn

  • The aim is to increase transatlantic LNG-shipments to 50bn cubic metres annually until 2030 (Photo: kees torn)
Listen to article

The United States pledged to increase the export of liquefied natural gas (LNG) to the EU in a bid to reduce its dependence on Russian gas amid warnings that such a move could push prices even higher.

Washington will supply Europe with 15bn cubic metres of liquefied natural gas before the end of the year, US president Joe Biden and EU Commission president Ursula von der Leyen announced on Friday (25 March).

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

The EU wants to cut Russian gas imports by two-thirds this year and end all fuel imports from Moscow by 2027 in the wake of the Russian invasion of Ukraine. Russia supplies 40 percent of Europe's gas needs.

This new agreement with the US is "a big step" to replace all Russian LNG supplies, von der Leyen said.

The aim is to increase transatlantic LNG-shipments to 50bn cubic metres annually until 2030 — one-third of the volume the EU currently still imports from Russia.

"[This deal] shows the US and EU stand shoulder to shoulder," Belgian prime minister Alexander de Croo said on Friday, underlining Western unity in response to Russian aggression.

But critics have pointed out that American LNG plants are already producing at full capacity.

This means that any additional EU gas purchases will have to be redirected from other markets, and Europe will need to outspend other buyers, mainly in Asia.

"If there is going to be competition with Asia, prices could be really crazy," Greig Aitken, an energy expert at Global Energy Monitor, a San Francisco-based non-governmental organisation that catalogues energy projects globally, said.

With the war increasing price volatility and raising concerns over gas supplies, the EU is trying to redouble efforts to build a more resilient energy system.

"The war in Russia challenges the entire EU energy policy of the last decade, and the shift is fundamental. We have to rethink our energy policy," an EU official said on condition of anonymity.

The commission is expected to present a long-term energy policy in May, but the war in Ukraine and the ensuing price surge has already led to a flurry of proposals for new gas projects.

LNG push

German chancellor Olaf Scholtz has announced two LNG terminals in the country, and four more projects are under discussion. Italy is considering building a new onshore gas terminal, and so are Estonia and Latvia, which could take years.

Spain has called on the EU to revive the previously rejected Midcat-pipeline project with EU public money.

This 1250-km pipeline would connect the Spanish and French energy systems, increasing the interconnection of the Iberian peninsula with the rest of Europe. The project, cancelled in 2019 because it was deemed unprofitable by French and Spanish regulators, would take at least three years to complete.

"Since the start of the war, there has been an explosion of new projects," Aitken said. "But most don't seem appropriate or cannot be finished quickly."

More gas?

Even if Europe manages to import an extra 50bn cubic metres of liquified gas, there are doubts if new infrastructure is needed.

According to a report published this week by Ember, an independent energy think tank, Europe has enough existing capacity. Therefore, it does not have to invest in new gas infrastructure.

A lack of coordination between member states may lead to more gas infrastructure being announced in the coming months. But activists warn that this may also distract governments from investing in renewables.

"Instead of lining the pockets of American fracking companies, Europe should focus its energy investments on renewable energy," Murray Worthy, gas campaign leader at Global Witness, a human rights organisation, said in response to the new LNG deal.

In light of the Russian invasion of Ukraine, expansion of LNG is now perceived by politicians and governments as a way to slash Russian imports.

"But gas is a dead end," Ester Asin, director of World Wildlife Fund's (WWF) European Policy Office, said.

Building new import terminals would mean locking in fossil gas imports for years, potentially decades — long after the EU needs to quit fossil fuel to achieve its climate targets.

"Making the wrong decisions now will only worsen things," she said.

Green label for gas may be coming unstuck

The European Commission on Tuesday defended labelling natural gas as a sustainable investment during a session at the European Parliament. Sceptical lawmakers said demand for gas is strong enough.

No new EU gas infrastructure needed despite war

Russia's invasion of Ukraine has created political momentum for the expansion of gas import capacity in Europe, but Europe already has more than enough, experts find.

Latest News

  1. "Swiftly dial back" interest rates, ECB told
  2. Moscow's terror attack, security and Gaza
  3. Why UK-EU defence and security deal may be difficult
  4. EU unveils plan to create a European cross-border degree
  5. How migrants risk becoming drug addicts along Balkan route
  6. 2024: A Space Odyssey — why the galaxy needs regulating
  7. Syrian mayor in Germany speaks out against AfD
  8. Asian workers pay price for EU ship recycling

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Stakeholders' Highlights

  1. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  2. UNOPSFostering health system resilience in fragile and conflict-affected countries
  3. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  4. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  5. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  6. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA

Join EUobserver

EU news that matters

Join us