European nations are far behind Mexico and China when it comes to receiving liquefied natural gas from the U.S., but the region is making its biggest effort to date to change that.
European Commission trade officials will travel to Washington on Aug. 20 to follow up on an energy agreement last month between the Commission’s President Jean-Claude Juncker and U.S. President Donald Trump. Europe pledged to import more LNG in a bid to diversify imports, while America is seeking new markets for its expanding LNG production. Russia is currently Europe’s biggest supplier.
“The European Union is ready to facilitate more imports of liquefied natural gas from the U.S. and this is already the case as we speak,” Juncker said in a statement on Thursday. “The growing exports of U.S. liquefied natural gas, if priced competitively, could play an increasing and strategic role in EU gas supply.”
Europe received about 10 percent of total U.S. exports last year, up from 5 percent in 2016 after the American shale gas revolution went global with the opening of the Sabine Pass export facility on the country’s Gulf of Mexico coast. Since then, Europe has imported more than 40 LNG cargoes from the U.S., or 2.8 billion cubic meters, the Commission said.
Still, that’s just a fraction of Europe’s demand of almost 550 billion cubic meters last year. Most gas arrives by pipelines from Russia and Norway, as well as in LNG tankers from Qatar, the biggest producer of the super-chilled fuel. As the region’s own fields deplete and nuclear and coal plants are decommissioned, demand for the fuel is rising.
Europe has also pledged to reduce its increasing dependency on the Russian fuel by supporting the development of new LNG terminals. And while Trump has a vision of Europe becoming a “massive buyer” of U.S. LNG, the product will still have to compete with lower-cost gas arriving from Siberian fields.
So far, the economics work against large-scale U.S. LNG volumes sent to Europe, but that may change as the global market for the fuel expands. While sales to Europe has so far been modest, Citigroup Inc. said in May that could change.
To facilitate LNG trade with the region, the U.S. needs to lift its requirement for prior regulatory approval of exports to the EU, the Commission said. The bloc has also committed to help finance LNG infrastructure projects and is supporting new terminals from Croatia to Greece and Ireland.