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US, EU Strike LNG Deal Deal as Europe Seeks to Cut Russian Gas

US, EU Strike LNG Deal Deal as Europe Seeks to Cut Russian Gas

Friday, 25 March, 2022 - 09:00
The logo of the Nord Stream 2 gas pipeline project is seen on a large diameter pipe at the Chelyabinsk Pipe Rolling Plant owned by ChelPipe Group in Chelyabinsk, Russia, February 26, 2020. (Reuters)

The United States will work to supply 15 billion cubic meters (bcm) of liquefied natural gas (LNG) to European Union markets this year, as Europe seeks to wean itself off Russian gas supplies, the transatlantic partners said on Friday.

US President Joe Biden and European Commission President Ursula von der Leyen announced the formation of a task force on Friday to reduce Europe's reliance on Russian fossil fuels following Russia's invasion of Ukraine.

"Today we've agreed on a joint game plan for that goal, while accelerating our progress towards a secure, clean energy future," Biden told a news conference, adding their initiative would also seek to maximize the use of renewable energy and reduce energy demand.

The Commission will also work with EU countries to ensure they are able to receive about 50 bcm of additional LNG until at least 2030, the factsheet provided by the White House said.

It was unclear whether it referred to amounts additional to last year's 22 bcm of US exports to the European Union.

Since US LNG plants are producing LNG at full capacity, analysts say most of the additional gas going to Europe would have to come from exports that would have gone to other parts of the world.

That is partly happening because European gas prices have in recent months mostly been the highest in the world. However, some cannot be easily redirected as it is under contract.

The bloc has already stepped up efforts to secure more LNG after talks with supplier countries, resulting in record deliveries of 10 bcm of LNG in more than 120 vessels in January.

That month, US deliveries rose to 4.4 bcm, around double the normal amount for January.

About 10% of EU gas needs are met by domestic production.

Russia typically supplies 41% of the rest of the bloc's needs, equivalent to 155 bcm, mostly through pipelines and about 15 bcm in the form of LNG.

The Commission plans to draw up plans in May to end the European Union's use of Russian fossil fuels by 2027.

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