US Negotiating Extra Gas Supplies for Europe

Journalist Irina Kezik explains why the U.S. is looking for alternative gas suppliers that would replace Russia on the European market.

Given the widespread mass media hysteria concerning Russia’s allegedly imminent aggression against Ukraine, Joe Biden’s administration began negotiating with major energy-producing companies to ensure an uninterrupted energy flow into Europe if the conflict between Russia and Ukraine disrupted liquefied natural gas supplies. This was stated by a representative of Biden’s administration. He did not specify which companies he was referring to; however, he noted that there have been a series of talks with LNG bulk producers all over the world, from North Africa and the Middle East to Asia.

Earlier, Biden did not rule out imposing new sanctions against Russia if the Ukrainian crisis escalates. The West is confident that Russia can retaliate by cutting off the supply of natural gas to Europe. This is despite the fact that Russia has never given reason to doubt its energy supply reliability and, among other things, has always complied with all its contractual obligations.

Moreover, the Kremlin vehemently denies any plans of escalating the situation around Ukraine and consistently claims that it does not threaten anyone, whereas all such statements serve as a pretext to deploy additional NATO military personnel and weapons at Russia’s doorstep. Even though the Russian president’s press secretary, Dmitry Peskov, has accurately noted that these new U.S. energy talks sound completely insane, a number of gas suppliers have already reacted to the U.S. appeals in different ways.

Qatar, as one of the largest LNG exporters, has not yet officially spoken on the matter. However, various Qatar media outlets report that local natural gas producers are already operating at full capacity, thus most of their deliveries are going straight to Asia under long-term contracts that could not be terminated. That being said, Qatar would not want these Asian deals to be compromised in any way, even though new European contracts might be politically advantageous to Qatar.

In addition, the state-owned company Qatar Energy has been selling certain amounts of LNG on the spot market. This gas could mostly be shipped to Europe, but the supply is limited enough that it cannot replace the volumes of Russian natural gas.

Meanwhile, it has become known that Australian Minister of Resources and Water Keith Pitt announced that his country is ready to help any European nation with LNG supplies if the flow from Russia is cut off. “This shows how important Australian resources are to energy supplies around the world,” he stressed.

It is certainly worth noting that Australia and Qatar are world leaders in LNG production and exports. Japan and China are the main buyers of Australian resources. They account for more than 80% of natural gas exports. At the same time, China has also indicated its readiness to sell its excess supplies of natural gas.

The main LNG importers in China put their gas supplies out to tender on the spot market. For example, the trading arm of China Petroleum & Chemical Corporation has issued a tender for the sale of several dozen LNG cargoes, which are due in February-October 2022. This is the first time when the company has put up such a huge amount of gas for sale — about 45 cargoes. China National Offshore Oil Corporation, the country’s largest LNG importer, has announced that it will be selling gas on the spot market every month from May to November.

However, despite all these optimistic developments, one should not forget about logistics costs and the fact that today China is expected to experience significant economic growth, so it won’t be able to spare much of its energy resources. PricewaterhouseCoopers, the world’s leading audit and assurance services provider, predicts that China’s economy will grow by 5.5% in 2022, whereas the EU and U.S. economies are projected to grow by 4.4%. At the same time, the company’s analysts expect that China will maintain this position in the medium term.

But let’s get back to the U.S. and its efforts to find alternative natural gas suppliers for Europe. These efforts are based on a far-fetched pretext that is likely to meet the American desire of justifying its current policies. The U.S. foreign policy reminds us of a bull in a china shop, crushing everything in its path so that it can later ask its allies to fix its mistakes. There is no doubt that these current geopolitical tensions are being created and exploited by the U.S. to be used to its advantage. Even when Ukraine itself says that it does not observe any intensified tensions, the U.S. continues to claim the opposite and clings to any pretext for imposing new sanctions against Russia. It is no wonder that, first and foremost, the U.S. is concerned with the Nord Stream 2 gas pipeline. On the one hand, the U.S. has reached an agreement with Germany to avoid imposing new sanctions on Nord Stream 2, but, on the other hand, it often fails to stick to its promises and wants to put obstacles in the way of the project. The U.S. needs a good reason to shut down Nord Stream 2, because everyone in the West realizes that all is moving toward its logical conclusion: The pipeline will be certified in Germany shortly. It is especially true, given that Europe is looking forward to launching Nord Stream 2 as soon as possible after suffering from the transition to unreliable renewable sources of energy last year.

Biden’s administration has officially stated that it intends to prevent the commissioning of Nord Stream 2 in the event of further escalation of the Ukrainian crisis. This has been announced by a spokesperson at the U.S. Department of State, Ned Price. “[T]he implementation of Nord Stream 2 will not budge. We want it to be very clear,” Price said.

It seems as if the U.S. already had elaborate plans for interfering with the launch of the pipeline and is simply waiting for the smallest excuse to impose new sanctions on Russia. The U.S. has started looking for alternative suppliers of natural gas — not because it is afraid that Russia will stop delivering gas to Europe, but because if Nord Stream 2 is really shut down Europe will, in any case, need additional volumes of gas in order to somehow curb the imminent rise of energy prices. It is clear that this outcome would be extremely disadvantageous to the U.S. as a whole and to Biden, who has the lowest approval rating of any president ever.

The author is an expert at the Intersectoral Expert and Analytical Center of Russia’s Union of Oil & Gas Producers and Tekface Project manager.