Energy News Beat
Donald Trump wants EU countries to buy more US-shipped gas. There are reasons for Europeans to consider taking the bait, but each comes at a price.
At first glance, US supply and European demand for liquified natural gas seem like a match made in heaven.
“We still get a lot of LNG from Russia and why not replace it with US LNG, which is cheaper for us and brings down our energy prices?” EU Commission President Ursula von der Leyen suggested in November, just a week after Trump’s re-election.
The Make-America-Great-Again president has ‘recommended’ the EU buy LNG as a way to reduce its trade deficit with the US – and thus, he hinted, avoid tariffs.
From a purely political standpoint, engaging Trump “would be a pretty sensible strategy,” said Ben McWilliams, an analyst with Bruegel, the Brussels-based think tank.
EU demand for LNG may have peaked
McWilliams’ own research about European natural gas imports suggests there is more at play.
First, there is Europe’s demand for gas.
During the 2022 energy crisis, when Russia tightened gas flows to Europe, imports of US LNG filled the gap to keep factories running and houses warm.
To this day, US exports account for nearly 50% of LNG flowing to the EU, with volumes remaining relatively stable since the beginning of 2022.
But while the US may dominate Europe’s LNG imports, when pipeline contracts are factored in, it is just one of the bloc’s many providers, accounting for less than a fifth of EU imports. Norwegian gas imports, for example, add up to more than double the US amount.
And EU gas consumption, which has already tumbled by 13.3% since 2022 – 7.4% of that slide having occurred in 2023 – is set to abate even further in line with the bloc’s 2030 climate targets.
In 2024, LNG imports to the EU declined compared to the previous year – leaving the network of terminals along Europe’s coastline underutilised. Warm winters and a weakened economy in most European states explain some of that drop. But the continent’s shift towards renewables accelerated at a faster-than-expected pace during the same period.
As a result, some countries are reconsidering expansion plans. Yet even those plans go foward, Europe’s capacity for LNG regasification (the process of converting ship-friendly LNG back into its original state) is still predicted to peak in 2028.
Germany epitomises Europe’s 2022 LNG rush. Its four floating terminals, set up in response to the 2022 energy crisis triggered by Russia’s all-out invasion of Ukraine, have been running well below capacity, with utilisation rates currently ranging from 0% to 64%. Despite the tepid demand, Berlin insists the terminals have played what Stefan Wenzel, a senior official in the economy ministry, calls “an important effect on price stability”.
And then there is the supply side.
The IEA is predicting a global glut by the end of the decade – 50% more LNG should be sloshing in ships around the world by 2030, driven by production expansion in the US and Qatar.
A price to pay for smoother relations?
With a now more diversified gas supply portfolio, sliding demand and growing global supply, Europe’s negotiating position on gas is remarkably stronger than a few short years ago.
The transatlantic relationship is a complex one, however, and European leaders will weigh up many factors that could incentivise them to pursue tighter energy relations with the US. Overall, they know that energy exports to Europe have long mattered to Trump personally and politically.
First and foremost on their minds will be Trump’s tariff threats. The US is the main trading partner for Germany and the EU, so tariffs would seriously affect European industries such as the already-struggling automotive sector.
And then there is defence. Trump’s ambivalence on Ukraine and NATO is well known, as are his demands that NATO partners start paying their fair share. EU leaders may calculate that a few LNG contracts are a reasonable price for smoother relations with the new US president.
Climate concerns and new dependencies
Then again, Europeans also have concerns about the dirtiness of LNG gas. Think-tank RMI found that if more than 4.7% of gas leaks along the supply chain, it is no better than coal. And while the data has not fully settled, the US’s main production region reportedly leaks between 3% to 9% of production.
This matters because the EU’s new methane regulation will begin benchmarking gas leakage, to be determined by the European Commission by 2029 – which will penalise new ‘dirty’ LNG import deals from 2030 on.
With Russian gas cuts fresh in their minds and wary of Trump’s transactional approach, European leaders will also want to avoid overdependence on US gas.
German Vice Chancellor and Economic Minister Robert Habeck bluntly spoke of “geopolitical dependency repeating itself” by taking Trump’s bait. “We don’t need to have ourselves be pushed around,” he said.
Trump is not the only complication when it comes to environmental standards. In December, Qatar threatened to stop shipping gas to the EU if member states proceed to strictly apply the bloc’s new supply chain directive (CSDDD), due in 2027.
More LNG deliveries have long been scheduled
So where does that leave Europe, eager for cheap and stable energy supplies but needing to manage the all-important transatlantic relationship?
Bruegel’s McWilliams points to several LNG export terminals in the US and Qatar, expected to come on line in the near future.
Alex Froley, senior LNG analyst at commodity intelligence service ICIS, does not expect major short-term changes, pointing out that much of the existing LNG output from the US is tied up in long-term contracts.
“In the longer term, the EU is already lined up to take more US LNG, but President Trump’s moves to speed up permitting for new projects will speed up the delivery times”, he says.
In other words, Europe is already prepared to soak up more US LNG. Whether US producers will want to ship even more gas across the Atlantic into an increasingly saturated market is another question, however.
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The post Europe doesn’t need US gas, but might buy it anyway appeared first on Energy News Beat.
