EU faces dilemma as Trump demands increased LNG imports

Donald Trump has warned the EU of a trade war unless it increases its purchases of US oil and gas. While Brussels has shown some openness to this idea, it has no authority to make such purchases itself. In the meantime, European countries continue to import record volumes of cheaper liquefied natural gas (LNG) from Russia, according to an aritcle by the Financial Times.

The potential for Europe to act as a unified bloc in buying more American fuel is central to the transatlantic relationship, especially as the US president-elect is set to be inaugurated on January 20. Last month, Trump posted on social media: “Large scale purchase of our oil and gas. Otherwise, it is TARIFFS all the way!!!”

European Commission president Ursula von der Leyen soon supported the idea, saying, “Why not replace [Russian gas] by American LNG?” However, the EU's executive body does not buy gas, and can only indicate that European companies are interested in US LNG. “We are not going to reconsider everything on January 21,” one EU official explained.

The challenge lies in Europe’s dependence on cheaper Russian fossil fuels. In 2022, EU companies imported record volumes of LNG from Russia. Mike Sommers, CEO of the American Petroleum Institute, argued, “That LNG should be coming from the United States.”

Although the EU has not banned Russian LNG like it did with Russian coal, it has targeted an end to Russian fossil fuel reliance by 2027. However, some ministers believe that this is not sufficient to compel companies to cancel existing contracts. While LNG could be added to new EU sanctions, unanimous approval from all 27 member states would be required, with Hungary and Slovakia likely to oppose such a move.

The US has recently imposed sanctions on two smaller Russian LNG facilities, but refrained from sanctioning Yamal, a major terminal. Tatiana Mitrova, analyst at the Center on Global Energy Policy, suggested that a logical move would be for Trump’s administration to enforce stricter sanctions on Yamal, aiming to push more US LNG to Europe.

The US is confident that its LNG industry can meet Europe’s needs. S&P Global Commodity Insights noted that 10.3 million tonnes of LNG from US plants under construction are already contracted for Europe, with an additional 9.5 million tonnes available, surpassing the 17 million tonnes of Russian LNG the EU imported in 2022.

Trump has pledged to lift the freeze on new LNG export capacity, imposed by the previous administration, as one of his first actions. The EU also has the ability to import more LNG through regasification terminals, which convert liquefied fuel back into gas.

However, price remains a significant issue. EU gas prices are more than three times higher than those in the US, and have remained over double what they were before the Russian invasion of Ukraine in 2022. “The price issue is a delicate and decisive one,” remarked one senior EU official.

Cheniere Energy's Anatol Feygin stated that commercial decisions, not government directives, will determine US LNG flows to Europe. He added, “The US is very different than Qatar and other parts of the world. There are no direct government-to-government transactions.”

Feygin suggested that the EU could set up a strategic LNG reserve to include US shipments. Meanwhile, according to the International Energy Agency, EU demand for natural gas is expected to fall by up to 25% by 2030, with new production from countries like Qatar and Canada. Michael Stoppard of S&P Global noted, “With each passing year, it becomes easier for Europe to line up alternatives to Russian LNG — especially from 2026 onwards.” 

By Vugar Khalilov