By Wojciech Wrzesien @ Shutterstock.com
Joe Biden recently pledged to “send as much LNG to Europeans as possible to decrease their reliance on Russian energy.” The Wall Street Journal reports
Shrinking flows of Russian natural gas to Europe have triggered a global race among U.S. allies to secure American gas exports, testing the country’s ability to meet fast-growing demand.
Russia throttled deliveries of natural gas to Europe after the continent adopted a flurry of sanctions over its invasion of Ukraine. That change has left Europe scrambling to secure alternatives, especially from the U.S. The continent’s liquefied natural gas, or LNG, imports from the U.S. more than doubled between March and June from the year prior, according to consulting firm Rystad Energy.
Russian natural gas began flowing again at a reduced volume through the critical Nord Stream pipeline into Europe on Thursday, ending 10 days of tense speculation about whether President Vladimir Putin’s regime would cut the flow permanently while the conduit underwent maintenance. But many European leaders fear Russia could almost entirely curtail gas exports by year’s end, making Europe more reliant on U.S. exports.
Increased European demand for U.S. gas is reshaping global LNG markets, as cargoes headed to Asia and other regions are redirected to Europe where they can fetch a higher price. Meanwhile, some developing nations that planned to shift from coal and oil to natural gas are finding themselves priced out of the LNG market.
For the U.S., the burgeoning LNG trade has elevated energy exports as a significant geopolitical and economic tool, resetting trade balances and giving it a freer hand to confront adversaries, say energy executives and government officials. But there are limits to how much gas the U.S. can provide to the world: U.S. exporters have maxed out their capacity and it will take years to add new, multibillion-dollar export terminals.
“We have enormous natural resources here,” said Dan Brouillette, former secretary of the Energy Department under President Trump. “The question is whether or not we can actually get [them] to the marketplace,” he said.
The U.S. sits on vast reserves of natural gas that can be extracted at low cost and moved through an integrated network of pipelines. This supply resulted in low gas prices relative to international markets, putting U.S. exporters at an advantage.
After the fracking boom unleashed huge volumes of gas, companies rushed to build export terminals, which act as giant refrigerators, chilling gas to a liquid state so it can be shipped economically, transforming the U.S. from a net importer of gas to an exporter. President Biden has pledged to send as much LNG to Europeans as possible to decrease their reliance on Russian energy.
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