U.S., EU Strike LNG Deal As Europe Seeks To Cut Russian Gas

The United States will work to supply 15 billion cubic metres of liquefied natural gas (LNG) to the European Union this year to help it wean off Russian energy supplies, the transatlantic partners said on Friday.

The EU is aiming to cut its dependency on Russian gas by two-thirds this year and end all Russian fossil fuel imports by 2027 due to Russia’s invasion of Ukraine. Russia supplies around 40% of Europe’s gas needs.

Concerns over security of supply were reinforced this week after Russia ordered the switch of gas contract payments to roubles, raising the risk of a supply squeeze and even higher prices.

Russia warned the West on Friday that billing in roubles for billions of dollars of natural gas exports to Europe could be just days away and ordered Gazprom to work out how the payments can be made within four days.

Senior U.S. administration officials did not specify what amount or percentage of the extra LNG supply would come from the United States.

U.S. LNG plants are producing at full capacity and analysts say most of any additional U.S. gas sent to Europe would have to come from exports that would have gone elsewhere.

“It normally takes two to three years to build a new production facility, so this deal may be more about the re-direction of existing supplies than new capacity,” said Alex Froley, gas and LNG analyst at ICIS.

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Source: Reuters