Brussels bets on American gas to counter Trump's tariffs

Europe is disconnecting from Russian gas and introducing further restrictions. Already in December, an embargo will cover LPG imports. From the new year, there will be a complete ban on re-exporting Russian liquefied natural gas (LNG) from the EU to third countries. Starting in February, bulk carriers loaded with Russian gas will not be allowed to use LNG terminals in Union ports.

Brussels is doing everything to convince the remaining European customers of Putin (Hungary, the Czech Republic, Austria, Italy, and Slovakia) to abandon Russian resources and instead opt for American gas.

- We still get a lot of LNG from Russia and why not replace it by American LNG, which is cheaper for us and brings down our energy prices - argued Ursula von der Leyen, the President of the European Commission, during her visit to Hungary, as cited by Reuters.

American gas is a card that the EC Chair uses skillfully. On one hand, it provides an alternative to Russian maritime supplies and the pipeline transit through Ukraine, which the authorities in Kyiv intend to terminate by the end of the year. On the other hand, it could be the key that helps to disarm the returning Donald Trump to the White House.

Europe faces a difficult task. Trump's return signifies changes to the rules at the table. The Republican president announced during his campaign that he would impose tariffs on Europe ranging from 10 to 20 percent. He has frequently emphasized his confrontational stance toward economic relations with Europe and pressures regarding defense spending within NATO.

Ursula von der Leyen thus uses an economic argument. She pulls out a key left by her predecessor Jean-Claude Juncker in 2018, presenting to the US President a joint business on LNG if the price is competitive.

The EC Chair has already discussed with the president-elect replacing Russian liquefied gas with cheaper American gas.

The United States is already one of the main LNG suppliers to the EU. According to data from the Agency for the Cooperation of Energy Regulators (ACER), the Union purchased 20.9 million tons of LNG from the US just in the first half of this year, constituting 46 percent of total LNG imports by sea to Europe. It is estimated that by the end of the year, the volume of American gas will reach around 40 million tons.

LNG supplies accounted for about 37 percent of gas supplies to the EU in 2024, mainly from the USA, and were more significant than extraction from the North Sea and Norwegian Continental Shelf (31 percent). Russian gas imported via pipelines accounted for about 13 percent of supplies, while the share of gas from Russia was approximately 20 percent when considering Russian LNG - explains Dr. Kamil Lipiński, Head of the Climate and Energy Team at the Polish Economic Institute, in his discussion with money.pl.

As he recalls, the main LNG importers were France (22 percent), the Netherlands (16 percent), and Spain (15 percent). - These countries unfortunately also led in importing Russian LNG. Poland's share in the total imported LNG to the EU during this period was about 5.4 percent. - he notes.

For most EU countries, moving away from Russian gas is an obvious energy security strategy for the entire Community. However, does entering into subsequent gas agreements with the USA, which under Trump's leadership could become an uncompromising competitor at any time, not pose another risk arising from gas dependency?

Brussels assumes that for Trump, business will matter most, and gas agreements with the EU will act as a feedback loop. In simple terms, trading with the Union should be profitable enough for Trump to mitigate his policies, such as customs.

Experts emphasize, however, that for energy security, diversification of supply routes and maintaining balance are necessary.

The key to the EU's strategic autonomy concerning the USA and Norway, as well as third countries in the process of gas supply diversification, will be the utilization of the market power of aggregated European demand for this resource. In this context, an interesting proposal for strengthening Europe's bargaining power in the gas market appeared in Mario Draghi's report, which suggested creating a common EU LNG purchaser that would negotiate contracts with major players in the USA, Qatar, and other third countries - Dr. Lipiński highlights.

Von der Leyen's efforts are moving in this direction. By negotiating larger contracts with Trump, she will try to lower the price as much as possible so that gas from the USA is genuinely cheaper for Europe than gas from Russia burdened with additional risks.

After the shale revolution, the USA became a major player in the LNG market. They significantly expanded their LNG infrastructure. The main liquefied gas export terminals include Sabine Pass (Louisiana), Cove Point (Maryland), Corpus Christi (Texas), Cameron (Louisiana), and Freeport (Texas). In Europe, American bulk carriers are received by ports in Belgium (Zeebrugge), France (Dunkirk, Montoir-de-Bretagne), Spain (Barcelona, Bilbao), the Netherlands (Rotterdam), and Poland (Świnoujście).

Europe is in a different position today than in 2022. Community countries have largely learned from the energy crisis and made a drastic change in supply routes. The development of infrastructure to receive LNG and mandatory reserves of stored gas provide security today.

And although gas storage facilities in Europe were crowded at 81 percent in November and December due to a wave of cold, slightly lower than in the same period in 2023 (90 percent) and 2022 (87 percent), it is still a high level that poses no threat to supply security this winter.

- As indicated in the analyses presented in the Winter Outlook 2024/25 by ENTSOG, even in the event of a complete halt in Russian gas supplies to the EU and a difficult situation in the global LNG market, the security of supply for protected customers: households, small and medium-sized enterprises, and public consumers will not be maintained - the PIE analyst emphasizes.

Despite this stabilization, Brussels must constantly monitor the situation, as energy resources are currently as effective a tool in politics as military capabilities.

- It should be remembered, however, that this balance can be quite fragile – damage or shutdown of key LNG or Norwegian gas importing infrastructure in Europe, or events reducing the export volume of LNG, such as failures and strikes, will translate into potential price fluctuations of gas in Europe - Dr. Lipiński notes.