The EU believes it will have enough gas for the next 10 years despite the US delaying export approvals for new liquefied natural gas (LNG) projects.
US President Joe Biden last week paused approvals of export applications for new LNG projects, a move that is aimed at reviewing their impact on climate change and the economy .
The United States has become the largest exporter of LNG to Europe since the Ukraine conflict in early 2022, as the EU scrambled to find alternatives to Russian fuel. Purchases of U.S. gas, combined with lower heating demand due to mild weather and high energy prices that forced some industries to shut down, have helped the continent weather the last two winters.
With more than 60% of US LNG going to Europe over the past two years, some doubts have been raised about the EU’s ability to secure gas after Mr Biden delayed approval of new export licenses. However, a European Commission spokesperson said the US decision “will not have any short- or medium-term impact” on EU gas security.
Floating LNG terminal in Wilhelmshaven, Germany, November 15, 2022. Photo: Reuters.
Some experts are also confident in this outlook. In the long term, they say, Europe’s gas consumption will decline as the region shifts away from fossil fuels to meet its climate goals. As a result, it may not need more LNG from the US despite strong demand elsewhere. That means US LNG will not remain unsold.
The EU is set to become a declining gas consumer, with signs already emerging, said Anne-Sophie Corbeau, a research fellow at Columbia University's Center on Global Energy Policy.
"In the future, due to the increase of energy sources such as biogas, gas from Norway, Africa and Azerbaijan, along with the decline in production, we may see a decrease in LNG demand, especially after 2030 - the time when Mr. Biden's decision will have a clear impact," she said.
But not everyone is reassured. Gas companies and lobby groups anticipated Mr Biden’s move and opposed it, but failed. The International Gas Alliance, which has more than 150 members, said the US decision was “deeply troubling and will undermine global energy security and emissions reductions”.
Importers Sefe and Uniper (Germany) and Jera (Japan) also issued similar warnings. Sefe and Jera both plan to buy gas from Venture Global LNG's Calcasieu Pass 2 plant, one of the projects affected by the suspension.
"A review of the plan could have negative consequences for German and European energy security in the future, such as price increases due to gas shortages on the market," Uniper, Germany's largest gas trader, warned.
Companies in areas like the Permian may have to burn excess gas when producing oil if they have no outlets, further contributing to global warming, a senior source at a major US energy firm said.
Giles Farrer, head of gas and LNG asset research at Wood Mackenzie, said Biden’s decision could impact the trajectory and growth of the sector, tightening the market in the long term.
LNG Allies, a US industry group, called on Washington to let the market decide whether more plants are needed. "Most forecasts predict that global LNG demand will continue to grow well into the 2030s. If US supply does not increase to meet demand, will countries that need gas turn to Russia or coal?" LNG Allies asked.
Phien An ( according to Reuters )
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