“Governments don’t make deals” when it comes to sending US oil and gas resources to specific countries, said Amy Myers Jaffe, director of the Climate Policy Lab at Tufts University Fletcher School. “You don’t have government-to-government oil companies.”
That means the United States may not be able to do much to immediately alleviate the energy crisis for European states that are want to cut their natural gas imports from Russia by two-thirds this year in response to Vladimir Putin’s invasion of Ukraine. Russian gas shipments to Europe reached 5.5 trillion cubic feet of gas in 2020, more than 25 percent more than a decade ago.
The energy crisis for America’s Atlantic allies is still forcing a policy shift from the Biden administration, which had come into office and pledged to drive a transition from fossil fuels to clean energy. Republicans and European leaders alike are urging the White House to use US energy production as a way to help Germany and other countries reduce their dependence on Moscow.
“Hopefully we’re over [European dependence on Russia] and producing more energy to supply them by next winter,” Republican Alaska Sen. Dan Sullivan said in an interview.
The problem is expected to be: a central topic when Biden visits Europe to attend a NATO summit and European Council meeting scheduled for Thursday. White House senior adviser on energy security, Amos Hochstein, and members of the State Department’s Bureau of Energy Resources are expected to accompany him, according to a person familiar with the plans.
The White House did not respond to questions. The State Department declined to comment on who would accompany Biden.
The visit comes after European Commission Vice-President Maroš Šefčovič met national security and energy officials in Washington this week, an EU energy official who asked for anonymity to discuss details said. Among them was Deputy Energy Secretary David Turk, who has coordinated much of the Biden administration’s response to energy supply challenges.
EU leaders are also making their requests public.
French eco-transition minister Barbara Pompili said at an event on March 10 that she told US Energy Secretary Jennifer Granholm that week, “You have to increase your production if you want to help us.”
“She told me she will try that,” Pompili added.
But Biden will have to be wary of making promises his administration cannot keep. The sheer size of Europe’s gas needed in a market that is already tight on supply a huge hurdle, as will the relatively small influence of the US government on short-term issues in the energy markets.
Energy analysts say the EU’s plan to cut Russian imports by 102 billion cubic meters (3.6 trillion cubic feet), or two-thirds of Russia’s purchases, isn’t realistic, but a war effort could cause the bloc finds new sources for 50 to 60 percent of that goal. However, such a shift would put pressure on the global LNG market.
The US is on track to become the world’s largest LNG supplier this year. But its LNG export businesses are running close to full capacity, with 80 percent of their cargoes going to Europe, said Ross Wyeno, the lead Americas LNG analyst at S&P Global. Venture Global LNG began shipments this month from its Calcasieu Pass facility in Louisiana and will ramp up to full capacity in early 2023, but no new capacity. is expected to come online until 2024.
“I don’t think the answer is that the US is going to offset all of Russian gas with LNG exports,” Charlie Riedl, head of the Center for Liquefied Natural Gas trade association, said in an interview. “That’s something I’d like to be wrong about, but I don’t think it will offset all of Russian gas extraction.”
Sudden European demand for more gas could help fund the construction of new LNG facilities, but it would take at least one to two years to build after executives give the green light to begin construction, Riedl said. European companies, which have so far not been major investors in US LNG plants, could decide to sign relatively short-term supply contracts with terms of around 10 years, he added.
“I think Europe is emerging as an important market, not only for LNG in the US, but also for other suppliers,” said Riedl.
Europe’s plans are complicated by weather, which is the main driver for gas demand when people turn their thermostats up or down. Even before Russian tanks entered Ukraine, European gas supplies dwindled due to the cold temperatures in 2021. However, that was offset by milder temperatures in Asia, which allowed Europe to receive LNG cargoes normally bound for South Korea, China or Japan.
“Europe has been saved by a warm winter in Asia,” Freeport LNG chief executive Michael Smith said at an energy conference in Houston last week.
The EU energy official who spoke to POLITICO on condition of anonymity to discuss talks with the Biden government admitted that meeting the bloc’s requests is difficult. A key concern is bringing in enough natural gas to rebuild storage levels in the run-up to next winter’s heating season — predicting painful price spikes and potential shortages if the EU implements its plan to dump most of Russian energy.
Another person familiar with the talks between the EU and the Biden administration agreed: Europe’s requests are vague. EU officials urged the Biden administration to step up US manufacturing and exports, but the Biden administration claims it can do little immediately as the government does not control the oil and gas sector.
“Europe’s major problem is the inability to formulate a realistic short-term energy security strategy within the confines of its decarbonisation agenda,” Nikos Tsafos, chair of energy and geopolitics at the Center for Strategic and International Studies, said in an email. “The end result is that despite the enormous political will for change, there is not yet a real roadmap to make this change happen.”
The Biden administration gave Europe and the oil and gas industry a potential boost on Wednesday by allowing two existing Cheniere LNG export terminals to expand the number of countries it can sell its gas to, in response to long-standing requests of the industry.
Europe’s loathing of Russia comes at a time when its natural gas supplies are already extremely low, making it less absorbent when demand peaks. European storage tanks are expected to hold about 1 trillion cubic feet of gas by the middle of this year, a precipitous drop from 3 trillion cubic feet at the same point in 2020, according to data from RBN Energy.
The EU is in close contact with major US natural gas producers and exporters such as Cheniere, Tellurian and Sempra, along with industry groups LNG Allies and the American Petroleum Institute, the EU energy official said.
But the person added that the EU is wary of supporting reports in the fossil fuel industry that pressure the Biden government to expand natural gas production.
That’s because natural gas is unpopular in the EU, given widespread opposition to fracking and pollution from methane, a potent greenhouse gas that is being targeted by a global climate change campaign. The official noted that the EU is walking a thin line in lobbying for more U.S. natural gas while trying to contain its aggressive short-term climate targets. The EU has pledged to reduce emissions of methane, the main component of natural gas, by 70 percent from 2020 levels by 2030, and aims to reduce carbon emissions from gas combustion by 55 percent by this decade to below 1990 level. .
“You have to be very careful about what you hear, what you get – the promises – and distinguish between what the industry would be asking anyway and what they are asking for in the context of the current situation,” the EU official said. “I know that distribution very well.”
Leslie Palti-Guzman, head of LNG analysis company Gas Vista, noted the discrepancy. The French government in 2020 stepped in to destroy a potential LNG deal between partially state-owned Engie and US LNG company NextDecade over fears that US-produced gas would be too dirty. Engie eventually closed the deal after evading the government.
But now Europe is expected to triple its imports of LNG from the United States, according to Gas Vista forecasts.
“Europe is finally seeing salvation in US LNG, and nobody is talking about ‘dirty-fracking’ anymore,” Palit-Guzman said.
Josh Siegel contributed to this report.