Will be hard

U.S., EU pledge to seek new natural gas supplies to displace Russia

EU countries have been scrambling to source new supplies of LNG to replace gas shipments from Russia.

By GLORIA GONZALEZ

President Joe Biden and European Commission President Ursula von der Leyen on Friday pledged to ramp up liquefied natural gas shipments to Europe to help the continent wean itself off of Russian energy, but it wasn’t immediately clear where they would get the extra fuel supplies.

The United States will work with international partners to supply an additional 15 billion cubic meters of LNG to Europe this year, and Europe is also committing to receive 50 bcm of LNG from the United States.

Biden acknowledged at a press conference in Brussels Friday morning that “eliminating Russian gas will have costs for Europe. But it’s not only the right thing to do from a moral standpoint. It’s going to put us on a much stronger strategic footing.”

EU countries have been scrambling to source new supplies of LNG to replace gas shipments from Russia, which totaled more than 150 bcm last year — about 10 times the volumes Biden and von der Leyen said they were seeking on Friday. Under the initiative announced Friday, Europe will build new LNG infrastructure to accommodate the additional flows, according to a senior administration official.

But energy experts say the global LNG market is already operating near capacity, and finding the supplies to feed the European demand may prove difficult.

In a briefing with reporters on Friday, a senior administration official told reporters that they “can’t speak to exactly where the 15 [bcm] is coming from.”

“This has been an active conversation among multiple parties and again, where the market is looking to move those existing volumes and so you know, whether or not to use a U.S. cargo or an Asian cargo. We don’t have the specifics to share with you today,” the official said.

The European Commission recently announced a new plan to cut gas purchases from Russia by more than two-thirds this year, but experts doubt the bloc will be able to find the 100 million billion cubic meters of gas to meet that goal. And earlier this week, Energy Secretary Jennifer Granholm told reporters the U.S. “is exporting every molecule of liquefied natural gas that we can” to help European buyers.

The U.S. LNG export industry has grown quickly in recent years and became the world’s leading supplier this year. Although several U.S. companies have proposed adding new liquefaction plants, no new capacity is expected to come on line until 2024.

The U.S. and EU announced that a new task force will simultaneously work to reduce overall gas demand to align with the U.S. and EU’s shared climate goals, including by expanding energy efficiency initiatives and renewable energy development.

The administration official said the United States has nearly doubled its LNG shipments to Europe since the beginning of the year, and has worked with international entities, including in Asia, to scale up LNG supplies to the continent. “And so we’re going to continue those efforts in 2022. That’s what we’re committing to do to hit the 15 bcm target,” they said.

But energy analysts have noted that many of those cargoes were rerouted from Asian customers who hold long-term contracts with U.S. companies. An unexpectedly warm winter in Asia reduced the demand for gas there, but that may not be the case in the future for countries such as China, Japan and South Korea, which have been the world’s biggest importers of the fuel.

The White House said new LNG import terminals and pipelines will be built with greenhouse gas intensity reductions in mind, including using clean energy to power operations, reducing methane leakage and building clean and renewable hydrogen-ready infrastructure — a nod to concerns about the adverse impact a scale-up of gas imports could have on the climate goals of both the United States and the European Union.

Charlie Riedl, executive director of the Center for Liquefied Natural Gas, said in a statement Friday that the gas industry needs regulatory certainty and assistance from FERC and DOE to help achieve this ramp up in LNG exports to Europe.

“The LNG industry can build, but regulators must do their part to help expedite the essential infrastructure that is needed here and in Europe to meet these ambitious goals and help our European allies,” Riedl said.