U.S. President Joe Biden and European officials on Friday announced a new partnership to increase shipments of natural gas from the U.S. and its partners to Europe, as they aim to reduce that continent’s reliance on Russian energy products.
The move comes as Biden this week took part in a range of meetings in Europe that are focusing on responses to Russia’s ongoing invasion of Ukraine.
Under the plan announced by Biden and European Commission President Ursula von der Leyen in a statement, the U.S. will boost its liquified natural gas shipments (LNG) to Europe and source other gas from partner nations to total a 15-billion- cubic-meters increase for 2022, with “expected increases going forward.”
The partnership would also see both sides aim to stay on track with climate goals, by cutting greenhouse gas intensity of all new LNG infrastructure and associated pipelines. Those efforts would include using clean energy to power onsite operations, cutting methane leakage and building clean and renewable hydrogen-ready infrastructure.
Von der Leyen said it plans to work with member states towards a goal of ensuring, at least until 2030, demand for around 50 billion cubic meters per year of additional LNG. Prices would reflect long-term fundamentals and stability of supply and demand.
Jake Sullivan, Biden’s national security adviser, told reporters on Wednesday that the subject of cutting European dependence on Russian natural gas “has been the subject of intense back and forth over the course of the past few days and weeks.”
Analysts had their own ideas ahead of that announcement on what kind of new measures could be announced in natural gas
“We suspect that the Biden Administration is combining voluntary actions with some potentially creative legal authority to introduce some near-term shipments of U.S. LNG while much larger efforts are finalized,” said analysts at Height Capital Markets in a note on Thursday. “For several months, the Biden Administration has been reaching out to global suppliers and importers of LNG for ways to redirect cargos to Europe if needed.”
Analysts at Evercore ISI said their sense is the new effort will be “building on some organic moves by private parties to redirect gas shipments to Europe to take advantage of higher prices, even when it means breaking existing contracts.”
“We also see growing signs that the EU’s move to sanction or punitively tax Russian oil may come sooner rather than later, even as Germany holds the line for now against any similar move on gas,” the Evercore team added.