U.S. commitment to alternative sources of blue fuel to the E.U. is all hot gas

Must Read

Joseph P Chacko
Joseph P Chacko
Joseph P. Chacko is the publisher of Frontier India. He holds an M.B.A in International Business. Books: Author: Foxtrot to Arihant: The Story of Indian Navy's Submarine Arm; Co Author : Warring Navies - India and Pakistan. *views are Personal

America claims that it is fully prepared to fill the gap with its liquefied natural gas or ‘blue fuel’ if Russian natural gas supplies to Europe are cut off due to the escalation in Ukraine.

 The U.S. President Joe Biden, speaking at a joint press conference with German Chancellor Olaf Scholz at the White House, assured that Washington was “ready to fill the energy gap that could arise if Russian pipelines stopped supplying this commodity to their western neighbours.”

However, experts say that the United States committed to E.U., something the U.S. itself does not really believe.

Despite the confidence in the tone with which the promise was made, there seems to be no clear understanding of how to fulfil it.

“… We are considering ways to replenish the lost gas from Russia. We’re in the process of trying to figure out what we can do about it, as well as talking to our friends around the world. We think that we could make up for a significant part of it that would have been lost,” Biden said.

Biden’s assurances came in response to a question from a German journalist who expressed doubts about America’s ability – and willingness – to ensure E.U. energy security, calling it an “empty promise.” He also noted that American LNG is significantly more expensive and available in smaller quantities than would be required to replace Russian gas.

Earlier in January, a senior U.S. administration official told reporters that the U.S. was exploring alternative sources of natural gas for Europe if Russian transit through Ukraine was cut off. The official expressed confidence that the United States will be able to meet the needs of Europe through alternative sources during the rest of the spring and winter.

Later, the media reported that more than 20 gas tankers were already heading from the U.S. to Europe amid attempts by the E.U. and Washington to find an alternative to Russian fuel. U.S. President Joe Biden’s administration officials have been making video calls to officials around the world over the past few days in an attempt to persuade buyers in South Korea, Japan and other countries who have paid for their shipments in advance to let the U.S. reroute them to Europe. It is also reported that European officials are planning or have already made trips to Doha and Baku to arrange supplies.

E.U.’s addiction oof Russian blue fuel

Austria, which is heavily dependent on Russian gas supplies, will look for new partners in the gas sector, said the Federal Minister of Digitization and Economic Affairs of Austria Margeret Schrambyok in an interview with the Austrian public broadcaster ORF on Sunday.

But, she said Austria will not abandon the Nord Stream 2 gas pipeline project and will not join the sanctions prohibiting its commissioning at the request of other countries.

“I know that there are countries that want Austria to completely abandon Nord Stream 2. This will not happen either from my side or from the side of the Ministry of Foreign Affairs because we, as a state, have invested heavily through our oil and gas company OMV,” she said. 

In 2021, Russia shipped about 35% of the gas imported to Europe. About 31% flowed via pipeline, and 4% liquefied natural gas (LNG). Europe is defined as the U.K.+ 27 states that comprise the E.U.

Diversifying the supplies

As per Schrambyok, the European Union as a whole also needs to look for new partners in the gas sector. According to her, the E.U. is currently actively conducting a dialogue with Qatar.

Deputy Foreign Minister of Italy Manlio Di Stefano called for reducing the country’s dependence on Russian gas by establishing the supply of “blue fuel” from Algeria, Turkmenistan and Azerbaijan.

Manlio Di Stefano said that Algeria, Azerbaijan and Turkmenistan are promising areas. It is possible to partially contain the Italian energy prices via the supply of Azerbaijani gas through the Trans-Adriatic Gas Pipeline (TAP).

Stefano believes that Turkmenistan, which has one of the largest gas deposits in the world can be a good option for Rome as Turkmen gas could be supplied by TAP. But, to make it happen, Turkmenistan has to join the pipeline in the Caspian Sea, which falls into the “Russian zone of influence”. 

Is Russia a reliable supplier?

Austria has long-term gas supply contracts with Russia, “and even in the worst times of the Cold War, Russia supplied gas to the country,” says Margeret Schrambyok.

But in an interview with the newspaper la Repubblica, Manlio Di Stefano said that Russia had almost halved the volume of gas supplied to Italy via the Ukrainian route at the beginning of this year. The Deputy Foreign Minister called this situation a threat to the country’s energy security. He called for urgent action to get rid of gas dependence on the Russian Federation. As a measure, he suggested finding new suppliers and switching to renewable energy sources.

The Kremlin says that Russia has always impeccably fulfilled its contractual obligations for gas supplies to Europe and has never given any reason to doubt its reliability. 

Japan is ready to supply LNG to the E.U. 

The Japanese authorities are ready to organize the supply of LNG to European countries if Ukraine’s situation escalates, the Kyodo news agency reported, citing sources in government circles.

At present, the terms of supply, in particular volumes and terms, are unknown. It is also not reported whether Japan will use LNG from reserves for supplies or redirect part of the volumes it has purchased from third countries.

In the past, the Japanese Minister of Economy, Trade and Industry Koichi Hagiuda had reiterated that Tokyo would like to explore the possibilities assistance, but will proceed from the fact that the actions “do not affect the lives of citizens.”

Shortage of gas

Despite record volumes of LNG deliveries from the U.S. to the European market, Washington cannot guarantee an uninterrupted gas supply and energy security of European countries if gas supplies from Russia are completely cut off.

Norway and Algeria – respectively the second and third largest suppliers of pipeline gas to Europe after Russia – cannot significantly increase supplies to Europe.

Among LNG producers, Qatar stands out. Along with the U.S. and Australia, this country is one of the three largest LNG exporters in the world. The White House has even named Qatar as its most important non-NATO strategically in order to push for more LNG supplies from that country to Europe.

Qatar’s LNG production capacity is 106 billion cubic meters. m/y (77 mln t/y before regasification). S&P Global Platts believes that the country can increase production very slightly – up to 107 billion cubic meters. m/y.

Almost all Qatari LNG – up to 95% – is supplied under long-term contracts to Asian countries. These contracts could be amended to allow some export volumes to be redirected to Europe, but Asian buyers of Qatari gas – primarily China and Japan – will demand compensation. Market participants believe that less than 10% of Qatari gas can be sent to Europe.

In addition, an obstacle to deliveries to the European market is Qatar’s requirement not to resell the supplied gas to countries outside Europe, which is contrary to E.U. law.

Australia, which became the world’s largest LNG exporter last year, does not have significant free volumes. The country accounts for over 40% of China’s LNG imports. In addition, due to high transportation costs, it is not economically feasible to supply Australian LNG to Europe even if current natural gas prices are maintained. Australia can produce LNG in the amount of about 80 million tons per year.

Europe’s’ limited LNG terminals

According to Rystad Energy, record LNG deliveries led to a rapid increase in the utilization rate of terminals for the reception and regasification of liquefied natural gas located in Southern and Western Europe – from 51% in early January to 75% in early February. It means that Europe has limited scope for increasing LNG imports.

In 2021, Russian gas supplies to Europe, excluding the Baltic countries, Moldova and Turkey, decreased to 135 billion cubic meters m/y. But in 2017-2020, the volume of supplies averaged 162 billion cubic meters. m/y – from 9.5 billion cubic meters m/month up to 16 billion cubic meters m/month, according to the Argus agency.

Suppose all European LNG terminals – excluding Lithuania and Turkey – are fully used without interruption for maintenance work, in that case, they can receive 151.5 million tons/year or a maximum of 12.6 million tons/month (17.4 billion cubic meters per month), which slightly exceeds the volume of Russian gas supplies.

Six LNG terminals, the most in Europe, are located in Spain. Their total capacity exceeds 44 million tons/year (over 60 billion cubic meters/year). However, the capacity of gas pipelines from Spain to Central Europe is insignificant. It does not allow for deliveries in volumes that can compensate for the cessation of gas imports from Russia.


Please enter your comment!
Please enter your name here


More Articles Like This