“US LNG exports to the European Union have nearly tripled,” said Ursula von der Leyen
Since March, world exports LNG in Geria Epirus have increased by 75% in the last year. Most of these exports come from the United States. In March, Washington agreed to deliver an extra 15 billion cubic meters of LNG to EU markets this year, a target it is likely to exceed.
Through June 2022, the United States exported approximately 57 billion cubic meters of LNG, of which 39 billion cubic meters are destined for Europe.
“US LNG exports to the European Union have nearly tripled,” European Commission President Ursula von der Leyen said.
Until recently, Europeans avoided US LNG, which is more expensive than Russian gas. in August 2021, before the outbreak of the energy crisis, not the war, in the Amsterdam TTF market, the price of natural gas it was 20 euros MW/h. Today we can be satisfied because it is below 40 euros, since last year it was above 300 euros, but the problem persists: in the United States the price of gas is around 6 euros/MWh. So in Europe, natural gas costs six to seven times as much today as it does in the US.
Regarding the evolution of prices, however, uncertainty prevails: there are factors that could lead to increases and others to decreases in prices. Especially if there is a slowdown in China’s economy, the demand for natural gas could drop considerably. But the construction of new LNG regasification terminals in Europe could also bring the price down, but that takes time.
norway gas
The European Union and Norway signed an agreement this week that provides for privileged cooperation in climate action, clean energy, industrial transformation and environmental protection.
Ursula von der Leyen recalled that in the coming years Norway will keep its natural gas flows to the EU high, thus reinforcing its role as the first supplier, after the outbreak of the war in Ukraine and the reduction in natural gas from Russia. By comparison, a year ago, Norway increased its annual production from 78 to 90 billion cubic meters of natural gas.
Norway is the country that, among our neighbours, has become richer as a result of the war. And the EU could have worked to cap the price of its supplies from Norway, long before it talked about a price cap on Russian gas.
more polluting
Experts also warn that US gas is more polluting. US gas comes mainly from shale (fracking), a technique largely banned in the European Union for environmental reasons. US LNG also consumes more energy than natural gas from Russian pipelines because it needs to be cooled and pressurized before being transported across the Atlantic.
In 2020, in fact, the Macron government asked the French energy company Engie to withdraw from an agreement to import LNG from the United States. The project was “not in line with France’s design and environmental vision,” a French source was quoted as saying by Reuters at the time.
Berlin has been similarly averse to American gas, though for now it has few alternatives to Russian imports. Fracking remains banned in Germany, despite the country having large shale gas reserves. “There are enough suppliers, it doesn’t have to be the United States,” German Green Economy Minister and Vice Chancellor Robert Habeck said on February 28, 2022, a few days after Russia invaded Ukraine.
“The EU, according to Habeck, could have imported supplies of natural gas from other parts of the world instead of fracking gas from the United States.”
However, a few months later, on August 16, Hambeck announced the signing of a memorandum of understanding with German energy companies to maximize the use of the country’s LNG import capacity. Under the agreement, Uniper, RWE and EnBW guaranteed to purchase LNG regardless of its price until 2024, to ensure that Germany’s 12.5 billion cubic meter per year regasification terminals are used to their full capacity.
The effects on the climate
So what is the environmental impact of US LNG versus Russian pipeline gas? The answer, unfortunately, is not simple. Natural gas is traditionally considered a more climate-friendly alternative energy source to coal because it burns approximately 50% less CO2 to produce electricity. The main problem is leaks that occur before the gas is burned. Methane is an extremely potent greenhouse gas, with impacts 27 to 30 times greater than CO2 over 100 years, according to the US Environmental Protection Agency. But measuring losses and therefore estimating their impact in the weather, it’s a tall order. According to Daniel Zavala, a scientist at the Environmental Defense Fund (EDF), a US-based environmental group, “It is currently not possible to compare US LNG emissions with Russian gas emissions due to the lack of of data”. While there has been “much progress in estimating methane emissions from US production areas,” Russia has not provided “much transparent data based on measurements.” However, in a March analysis, the Rocky Mountain Institute (RMI) environmental think tank concluded that Russian gas destined for Germany has a climate footprint two to three times that of gas from the US and Qatar, with calculations that are based on the assumption that Russian pipelines have double losses.
methane leaks
Gazprom, the Russian state gas giant, claims that the losses are close to zero due to the fact that methane is classified as a “toxic substance” in Russia. In 2020, Gazprom’s head of sustainable resource management, Konstantin Romanov, stated that methane leaks amounted to 0.02% of the volumes of gas produced, 0.29% of the gas transported and 0.03% of the released natural gas stored underground. But based on third-party measurements, the researchers estimate a minimum leak rate of 2% for Russia, significantly higher than what Gazprom advertises.
But US natural gas production is not free of leaks either, as evidenced by reports of massive leaks in the Permian Basin (between Texas and New Mexico), estimated at around 9% of natural gas production.
According to data from the International Energy Agency, in 2021 the United States lost some 6,339,000 tons of methane. For its part, Russia lost 5,039,000, although the Agency has warned that the figures on the subject are based on “low coverage.”
The United States is a bigger producer of natural gas than Russia, with about 965 billion cubic meters in 2021, compared to 762 billion for Russian gas. Therefore, these losses are spread over a much larger amount of extracted gas.