Can the US and Qatar gas Europe in an energy crisis?
The United States wants to guarantee gas supplies to Europe in the event of war in Ukraine and has initiated contacts with companies and with Qatar. Facts, comments and scenarios
The United States is trying to put together a global coalition of liquefied natural gas (LNG) producers to ensure Europe's energy satisfaction should a war begin in Ukraine and supplies from Russia are cut off.
EUROPEAN DEPENDENCE ON RUSSIAN GAS
The European Union is extremely dependent on Russian gas, which is worth about 40 percent of the bloc's imports. Moreover, supplies are already scarce – a fact that is contributing in a decisive way to the very strong increase in energy prices – and the pipes that guarantee supplies pass almost all through Ukraine.
THE CRISIS BETWEEN RUSSIA AND UKRAINE
The crisis on the Russian-Ukrainian border, along which Moscow has deployed a hundred thousand soldiers and various equipment, is causing fear of the outbreak of a conflict: it is an unlikely hypothesis – Russia does not have the capacity and has other interests -, but however possible. If the clash were to come, however, the gas flows from Russia to the Old Continent would further reduce or be completely zero, aggravating the energy crisis.
THE PLAN OF THE UNITED STATES
According to government and industrial sources gathered by Reuters , the administration of President Joe Biden has started discussions with several international energy companies (it is not clear which ones) to guarantee Europe the certainty of gas supplies.
The plan aims to compact the Union against Russia, removing perhaps the main concern of those member countries less prone to harshness towards Moscow: energy security and the repercussions on the economy. Germany, for example, is particularly vulnerable to a disruption in Russian gas flows.
Not even the United States wants a war to break out in Ukraine, because – among other things – it could worsen the energy crisis, push the cost of oil and the rate of inflation even higher.
THE MARKET SITUATION
According to information gathered by Reuters , the Biden administration's effort is led by the State Department and in particular by Amos Hochstein, an advisor for energy security.
The plan, however, may not be successful. In fact, it seems that the companies have told Washington that there is not enough gas available to replace the volumes of Russia, the second largest producer of the fuel in the world. The United States, on the other hand, is the first, as well as the largest exporters of LNG : as a rule, however, American tankers do not go to Europe but to Asia, given the possibility of greater earnings. However, in December several US ships changed course to reach the Old Continent , attracted by the very high gas prices.
In short, the gas market would be particularly “restricted”: there is not enough supply to compensate for a drop in Russian levels also because, in addition to Europeans, demand from Japanese and Chinese is also high. In short, there is a competition on current supplies.
THE AMERICAN DEMAND, THE COMPANIES RESPONSE
Moreover, it seems that the US State Department has not asked companies to increase their production levels. He asked them, however, if they have the capacity to increase exports, for example by postponing maintenance work on the fields.
CNN reports a different version of the story: it writes that the issue of increasing output was actually pulled out by the Biden administration, but companies would have been hesitant due to the technical time required and the risks (making large investments in a fossil source in a context of ecological transition could prove inconvenient).
REQUEST TO QATAR
The United States has also initiated contacts with Qatar, one of the largest exporters of LNG, regarding the possibility of supplying Europe with fuel. Biden would also like to invite Emir Tamim bin Hamad Al Thani to the White House to deepen the discussion, perhaps later this month.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/stati-uniti-qatar-gas-naturale-liquefatto-europa/ on Mon, 24 Jan 2022 13:55:47 +0000.