EU on track for nightmare energy ‘rationing’ ahead of cold winter
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After Russia invaded Ukraine, Mr Biden promised European leaders in March that he would help them end their reliance on Russian gas supplies by securing new supplies of liquefied natural gas. At first, this vow was greeted with scepticism, particularly as the US LNG industry was already hitting its export limits and the global market is dominated by long-term contracts that can dictate where exported gas would go for 20 years at a time.
However, Washington is already on track to surge over its initial commitment of supplying an additional 15 billion cubic meters of LNG for Europe this year, analysis of export data compiled by Refinitiv shows.
Yesterday, the US Energy Information Administration (EIA) announced that the country, which was already the world’s biggest gas producer, has now become the largest LNG exporter in the first half of 2022.
The body noted that in the first half of the year, US LNG exports rose 12 percent to an average 11.2 billion cubic feet per day (bcfd) compared with the latter half of 2021.
The US boosting its LNG export capacity, higher prices, and demand, particularly from Europe, have contributed to these soaring export numbers.
These figures offer hope for European countries, many of whom fear that a winter of blackouts and energy rationing is imminent as Russian President Vladimir Putin increasingly tightens his grip on Russian gas supplies.
However, previous reports from the International Energy Agency (IEA) have warned that as EU states scramble to secure gas supplies to end Putin’s control, it could leave many countries in lower-income states outside the bloc with energy shortages.
This in turn, could push countries like India and China to sign more deals with Russia in the face of energy deficits.
Refinitiv data reveals that through June of this year, the US exported about 57 bcm of LNG, with 39 bcm or 68 percent heading towards the EU.
This is more than the amount of gas the US sent to Europe throughout the entire period of 2021, exporting only 34 bcm, or 35 percent of LNG exports shipped to Europe.
The figures show that if the blistering pace of LNG exports continues through the second half of 2022, the total increase over 2021 would be around 45 bcm.
The European Union is in desperate need of additional gas supplies, and as fears of a winter without Russian gas grow, EU leaders are looking at drastic contingency plans.
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To prevent such a nightmare scenario, EU energy ministers are set to arrive in Brussels today for a special Energy Council to hammer out the details of the EU Commission’s plan to order member states to ration their gas supplies by 15 percent for the next two years.
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