Donald Trump has threatened the EU with a trade war unless it buys more US oil and gas. But despite Brussels signalling openness to the idea, it has no power to buy — and European countries are importing record volumes of cheaper liquefied natural gas from Russia.
The question of whether Europe can act as a bloc and buy more American fuel looms large over the transatlantic relationship after the US president-elect is inaugurated on Monday.
“Large scale purchase of our oil and gas. Otherwise, it is TARIFFS all the way!!!” Trump posted on social media last month.
Soon after his re-election, European Commission president Ursula von der Leyen backed the idea: “Why not replace [Russian gas] by American LNG?”
But the EU’s executive body is not a gas buyer and can do little more than signal to the US president-elect that European companies are interested in American LNG, say officials and analysts.
The bloc pledged in 2022 to buy more LNG from the US. Officials say there are no immediate plans to update that promise.
“What conditions to make this happen do we need to come up with? We are not going to reconsider everything on January 21,” one EU official said.
The underlying issue is the bloc’s inability to wean itself off cheaper Russian fossil fuels. Last year, EU companies imported record amounts of LNG from the country.
“That LNG should be coming from the United States,” said Mike Sommers, chief executive of the American Petroleum Institute, the US’s largest oil and gas lobby group.
Fearing a supply squeeze after Moscow gradually turned off pipeline gas to Europe, the EU has stopped short of banning LNG, the way it did with Russian coal — or setting a price cap on Russian LNG shipped on tankers as was the case with Russian oil.
Instead the bloc set an indicative target to completely wean itself off all Russian fossil fuels by 2027 and allowed governments to ban the country’s exporters from using EU gas infrastructure. Some ministers have complained this is not enough for them to force companies to break existing contracts.
LNG could be included in a new round of sanctions, according to EU diplomats involved in negotiations, but this would require unanimous approval from all 27 member states, with Hungary and Slovakia likely to oppose.
US President Joe Biden’s administration this month added two smaller Russian LNG facilities to the US sanctions list but has balked at listing Yamal, a major terminal supplying Europe and other parts of the world.
One “very logical” move would be for Trump’s administration to introduce tougher sanctions on Yamal, given how the incoming president seeks to push for more American LNG exports to Europe, said Tatiana Mitrova, analyst at the Center on Global Energy Policy.
The US industry is confident it has more than enough spare capacity to supplant Russian LNG from the European energy mix.
S&P Global Commodity Insights said a total 10.3mn tonnes of LNG was already contracted for Europe from US plants under construction. An additional 9.5mn tonnes are also available for buyers including in Europe. Those volumes exceed the 17mn tonnes of Russian LNG the EU imported last year, and “will be online on or well before 2029”, S&P said.
Trump has promised to lift a freeze on new LNG export capacity imposed by the previous administration as one of his first actions in office.
The EU also has scope to import more at regasification terminals, which convert the shipped liquefied fuel back into gas.
Price sensitivity, however, is a big issue. At the same time as placating Trump, the EU is struggling to protect its industries and cut high energy prices, particularly in Germany, the largest European economy.
EU gas prices are roughly more than three times higher than in the US and have stubbornly remained more than double what they were before Moscow’s full-scale invasion of Ukraine in 2022.
“The price issue is a delicate and decisive one,” said one senior EU official.
Anatol Feygin, chief commercial officer of Houston-based LNG exporting company Cheniere Energy, told the Financial Times that commercial decisions and price signals would determine US LNG flows to Europe, rather than government decree.
“The US is very different than Qatar and other parts of the world. There are no direct government-to-government transactions,” he said.
One way for Brussels or other EU governments to be involved is to set up a strategic LNG reserve that could include US shipments, Feygin suggested.
EU demand for natural gas is expected to drop by up to 25 per cent by 2030 compared with 2023 levels, according to International Energy Agency forecasts, while countries including Qatar and Canada are also set to bring more production online.
“We are at the beginning of a new LNG supply wave,” said Michael Stoppard, global gas strategy lead at S&P Global Commodity Insights. “With each passing year, it becomes easier for Europe to line up alternatives to Russian LNG — especially from 2026 onwards.”
Data visualisation by Shotaro Tani and Ray Douglas
