The EU closes an LNG agreement with the US, ignores the demand for payments in rubles

The EU closes an LNG agreement with the US, ignores the demand for payments in rubles

The European Union and the United States are set to unveil a deal on Friday to supply Europe with more liquefied natural gas (LNG) from the North American country, sources told Reuters, as the bloc seeks to quickly curb its dependence on Russian fossil fuels.
The European Union and the United States are set to unveil a deal on Friday to supply Europe with more liquefied natural gas (LNG) from the North American country, sources told Reuters, as the bloc seeks to quickly curb its dependence on Russian fossil fuels.

The invasion of Ukraine by Russia, Europe’s main gas supplier, sent energy prices skyrocketing to record levels and prompted the EU to commit to cutting Russian gas use by two-thirds this year, increasing imports of other countries and expanding renewable energies.

President Joe Biden, attending the EU leaders’ summit in Brussels on Thursday, promised the United States would deliver at least 15 billion cubic meters (bcm) more of LNG to Europe this year than previously forecast, sources familiar with the matter said. with the matter.

One of the sources added that the deal would also include increased US LNG exports to the EU in 2023.

But with US LNG plants already producing gas at full capacity, analysts said most of the additional supply going to Europe would have to come from exports that would have been shipped to other parts of the world.

“We expect that near-term measures to support European LNG imports will depend on the reallocation of existing supply,” analysts at Goldman Sachs (NYSE: GS ) said in a report, noting that “such relocation to Europe is already occurring.” because European gas prices have fallen in recent months.

Jason Feer, global head of trade intelligence at Poten & Partners, an energy and shipping consultancy, said a small amount of new LNG export capacity was expected to come online in the United States this year.

“But almost everything in the United States already belongs to someone. It’s under contract,” Feer said, noting that “if Europe wants more LNG, it will have to pay for it.”

Russia is the main supplier of gas to the EU and sent a total of 155 bcm of gas to the EU in 2021. Most of it came from pipelines and 15 bcm was LNG.

US LNG exports to the EU exceeded 22 bcm last year. North American exporters shipped record volumes of LNG to Europe for three straight months as prices from the region rose more than 10-fold from a year ago, with buyers in Europe and Asia vying for tight supplies.

Moscow said on Wednesday that “unfriendly” countries, including EU member states, must start paying in rubles for Russian oil and gas. This raised concerns about potential gas supply disruptions from Europe.

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