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29 Jan, 2024 11:36

Western Europe’s energy supply ‘vulnerable’ – Bloomberg

Giving up Russian gas for US LNG undermines the region’s security, analysts say
Western Europe’s energy supply ‘vulnerable’ – Bloomberg

Replacing Russian gas with liquefied natural gas (LNG) from the US has exposed the EU’s energy system to major security risks, Bloomberg has reported, citing industry experts.

The US, which started exporting its shale gas only in 2016, is currently the second-biggest gas supplier to the EU after Norway. In 2023, the US became the world’s top LNG exporter. 

Many EU states dramatically increased LNG purchases in 2023 following the drop in pipeline gas flows from Russia due to Ukraine-related sanctions and the sabotage of the Nord Stream pipelines in September 2022, which rendered them inoperable. 

“European reliance on US LNG will only grow, if more Russian gas does not reappear and the Qataris decide not to engage in a price war for market share,” Ira Joseph, a senior research associate at the Center on Global Energy Policy at Columbia University, told the news agency. However, the analyst added that changes in US policy could pose a major risk. 

In fact, US President Joe Biden recently ordered a temporary pause on approving pending and future applications for LNG exports, citing concerns over climate change. The halt is expected to allow the Department of Energy to update the economic and environmental guidelines it uses when approving new export licenses.

The White House had made a pledge to Brussels to quickly review applications for new export capabilities after the bloc opted to wean itself off of energy supplies from Russia.

Biden’s announcement “does not keep faith with that pledge,” according to Fred Hutchison, president and CEO of LNG Allies, as cited by Bloomberg.

Energy Aspects gas analyst David Seduski believes that the halt will “almost certainly be undone” if the Republicans retake the White House.

“This could be a pause for political purposes, to appease Biden’s base in the run-up to the general election,” he said. “Or it could be a longer halt to permitting that clamps down on the chances of these terminals being approved longer term.”

An unnamed senior EU official told the agency that the European Commission is not concerned about the bloc’s growing dependency on US LNG because there aren’t the same levels of political risks as with Russia.

However, analysts highlight potential challenges ahead. Jonty Shepard, vice president of global LNG trading and origination at BP, had previously warned that the growing reliance on US gas is creating a “concentration risk” for the entire sector.

For more stories on economy & finance visit RT's business section

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