European, US industry groups urge 'supportive' policies on US LNG supply to EU

The EU and US administrations should put in place "supportive" policies quickly to enable increased US LNG supplies to the EU, two industry groups said June 14.

In a joint statement, Eurogas and the US' LNG Allies said they had identified a set of actions that should be undertaken by the EU and US administrations, together with the industry, to allow for higher US LNG deliveries.

The EU and US in March agreed a joint declaration on energy security that laid out plans for the delivery of an additional 15 Bcm of US LNG to the EU in 2022 and a further 50 Bcm/year in the following years.

"Investments in the additional LNG infrastructure needed to deliver and distribute additional LNG volumes need certainty and security," Eurogas and LNG Allies said.

"Supportive policies must be quickly put in place in 2022 to make the increase in LNG deliveries from the US to the EU possible in the timeframe set out in the US–EU energy security taskforce announcement of March 25," they said.

"New LNG deliveries before 2030 means that contracts need to be signed in 2023 and contracted volume is important for the investment decisions for additional LNG infrastructure."

The EU has pledged to break free from its dependence on Russian gas supplies through supply from alternative sources, energy efficiency and more renewable gas production.

The pledge comes as European gas prices remain at sustained highs, triggered first last autumn by Russian supply constraints and concerns over storage, followed by a surge in prices after the Russian invasion of Ukraine.

The TTF front-month contract was last assessed on June 13 at Eur83.03/MWh, down from record highs reached in March, but still 200% higher year on year, according to Platts price assessments by S&P Global Commodity Insights.

EU-US task force

In the March 25 declaration, the European Commission and the US said they would immediately establish a joint task force on energy security to set out the parameters of new EU-US cooperation. The task force was due to convene on June 14.

The US is already a key supplier of LNG to Europe and exported 22 Bcm to EU countries in 2021, according to data from S&P Global Commodity Insights.

The main buyers were Spain (5.3 Bcm), the Netherlands (4.6 Bcm) and France (4.2 Bcm), the data showed.

Non-EU countries the UK and Turkey took a further 8.7 Bcm of US LNG between them last year.

In the first five months of 2022, exports of US LNG to the EU have risen sharply, totaling 25.3 Bcm of gas equivalent, S&P Global data showed, from 10.2 Bcm in the same period of 2021.

US LNG deliveries are therefore already more than 15 Bcm higher in 2022.

Eurogas and LNG Allies said June 14 that since the beginning of the Russian invasion of Ukraine -- and in response to European needs -- market participants had delivered more than double the volume of US LNG to Europe in 2022 since the war began compared with the same months of 2021.

"We strongly believe that existing market instruments, including long-term contracts for LNG delivery, must continue to be supported by the administrations," the groups said.

They added that industry "must be free to negotiate the terms that will ensure that the right amount of gas will be available at the right time for European consumers."

The groups also said that climate ambitions should be upheld and that suppliers and buyers should agree to work together to reduce methane emissions and carbon emissions "in the most effective way."

"Our ambition is to have the cleanest gas possible delivered from the US," they said.