The US will strive to supply the European Union with 15 billion cubic meters of liquefied natural gas (LNG) this year to help it wean itself off Russian energy sources, the transatlantic allies announced on Friday.
Due to Russia’s invasion of Ukraine, the EU plans to reduce its reliance on Russian gas by two-thirds this year and eliminate all Russian fossil fuel imports by 2027. Around 40% of Europe’s gas demands are met by Russia.
Senior US administration officials declined to say how much or what proportion of the additional LNG supply would come from the US.
LNG plants in the United States are operating at full capacity, according to analysts, and any additional gas supplied to Europe would have to originate from exports that would have gone elsewhere.
“Building a new production plant takes two to three years, so this contract may be more about re-direction of existing supplies than new capacity,” said Alex Froley, a gas and LNG analyst at ICIS.
It is difficult to reroute LNG that is under contract. Analysts believe that already high European gas prices will have to rise even higher to draw those cargoes to the 27-nation union.
Even if the 15 billion cubic meters is achieved, “it will still fall far short of replacing Russian gas imports, which totaled roughly 155 billion cubic meters in 2021,” according to ING Bank analysts.