(Bloomberg) — Europe, long-reliant on Russian natural gas, has nearly severed its dependency on the Kremlin in less than two years. Its preferred replacement — gas from the US — is widely viewed as abundant, politically palatable and less likely to be choked off than pipelines from Siberia.
It’s also growing riskier by the day.
On Friday, the White House announced the polarizing decision to halt the approval of new export permits for liquefied natural gas, or LNG, amid a backlash from climate-minded voters. The pause, which won’t affect those plants already under construction or in operation, threatens to delay or even derail some of the massive projects expected to hit the market toward the end of the decade and beyond. This advertisement has not loaded yet, but your article continues below. “US LNG continues to be the cornerstone of Europe’s supply diversification strategy,” said Leslie Palti-Guzman, head of research and market intelligence at SynMax. The Biden decision sends a real message “regarding solidarity and the reliability of its supply in the medium to long term. This is particularly crucial at a juncture where supplies from Russia” and other shippers can be “mired in unpredictability.”Even before the permit freeze shook buyers across the globe, Europe’s rapidly expanded reliance on US LNG might have given Brussels pause. In a very short window, the US has carved out a meaningful share of Europe’s gas supply, eclipsing any remaining Russian deliveries. America’s booming shipments today account for about half of the region’s LNG imports, a share that is widely expected to grow further. When considering gas shipped through pipelines as well, the US is the bloc’s second-largest gas supplier after neighbor Norway — a serious coup for the North American nation that only began exporting its shale gas in 2016.