The US is finalising a plan to supply the EU with up to 15bn additional cubic metres of liquefied natural gas by the end of 2022, according to three people familiar with the matter.
The agreement aims to help the EU reduce its dependence on natural gas from Russia, with the bloc racing to curb Russian imports by two-thirds this year.
LNG deliveries from the US would go towards a goal, set by the EU this month, of replacing 50bn cm of gas currently supplied by Russia with alternative supplies. In 2021, the US supplied Europe with 22bn cm, according to EU data.
Joe Biden, US president, and Ursula von der Leyen, European Commission president, hope to announce the agreement on Friday morning. The White House declined to comment.
“It is about additional LNG from the United States for the European Union, thus replacing the Russian LNG we had so far,” Von der Leyen said on Thursday.
A European Commission official said the plan with the US would focus on ensuring security of supply for the EU in the short term, as well as boosting production in the US in the medium term and landing on measures to limit consumption. This would involve “concrete” figures for shipments of LNG to the EU, the official added.
The EU is under intense pressure to bar imports of Russian energy, but German chancellor Olaf Scholz has warned against an immediate ban on the country’s fossil fuels, saying such a move could trigger a recession.
German officials say a steep reduction in Russian gas imports this year would achieve the same goal as sanctions.
The EU set out its plans to import an extra 50bn cm of LNG from global producers including the US, Qatar and Egypt this month, but some analysts have warned that the plan is unrealistic.
Officials briefed on the US plan stressed that the ultimate amount of LNG supplied to the EU would depend on commercial contracts. Much of the US’s LNG sales are already committed to countries around the world, particularly in Asia, while its coastal gas liquefaction terminals have been running at close to maximum capacity.
“We think that potential near-term measures will be largely focused on reallocation of supply to Europe, rather than actual increases in total US LNG export volumes,” wrote Samantha Dart, a Goldman Sachs analyst.
Mike Yarwood, senior research fellow at Oxford Institute for Energy Studies, said Europe would have to steel itself to pay higher gas prices for years to come to achieve its targets.
Europe’s spare LNG import capacity is concentrated on the Iberian peninsula but Spain has poor pipeline connections to shift imported gas to northern Europe.
Eastern European nations most heavily dependent on Russian gas lack the infrastructure to easily benefit from LNG imports with nearby terminals already operating at capacity, meaning they would struggle to increase imports much further.
Separately, the US Federal Energy Regulatory Commission on Thursday backtracked on new rules that would have made it harder to build gas pipelines amid criticism that they would hamstring the industry at the same time that the White House was promoting exports to Europe.
Neil Chatterjee, a former FERC chair, told the FT the decision was triggered by “a combination of world affairs and bipartisan political pressure”.
“A complete and total retreat by the commission,” he said. “I’ve never seen anything like that before. But it was the right thing to do.”
Additional reporting by Harry Dempsey in London, Justin Jacobs in Houston and Myles McCormick in New York
