EU set to loosen gas purchase goals despite US trade war demands

The European Union is planning to reduce natural gas purchase targets, even as US President Donald Trump insists that buying more gas is the only way to end his trade war.

On April 8, EU countries advanced plans to ease mandatory goals for refilling storage facilities ahead of winter—a move aimed at reducing gas costs, according to four diplomats who spoke to POLITICO.

This decision goes against the White House's demands that the EU spend an additional $350 billion on American gas to address a perceived trade imbalance between the US and Europe. However, Trump has made similar demands before, only to ignore European overtures toward a deal and impose tariffs anyway. These tariffs are now worsening the economic concerns that are prompting Europe to seek ways to cut energy costs.

Seven EU countries — France, Germany, Italy, Austria, Hungary, Slovakia, and the Netherlands — are leading the effort to reduce gas purchase goals, advocating for a reduction of the 90-percent-of-capacity storage target to 80 percent in specific cases. They argue that the higher target forces the EU to purchase large volumes of gas, much of it from the US, at a time when prices are high.

"In these turbulent times and [amid the] ongoing fight for competitiveness, it would be, of course, a better solution [to have greater flexibility] than just to stick to the current targets," said Lithuanian Energy Minister Žygimantas Vaičiūnas in an interview.

He added that lower industrial demand "might be one of the potential consequences" of Trump's tariffs, making it harder for the EU to purchase more US LNG.

Europe began increasing its reliance on American LNG three years ago when Russia invaded Ukraine and cut off gas supplies to the continent. Since then, US gas has become a crucial energy source for the EU.

That dependency is expected to grow in the coming months, as the EU seeks to phase out remaining Russian energy ties and replace gas previously delivered via Ukraine.

"The EU will have to buy more American gas to make up for lost Russian supplies," said Laura Page, a leading market analyst at intelligence firm Kpler. "Reducing the storage target will put less pressure on Europe’s gas imports this summer, which will help ease prices—ultimately leading to a better deal for the EU."

At the current refilling rate, Kpler data indicates EU storage is projected to reach just 78 percent of capacity by winter. To meet the 90 percent target, the EU would have to overpay for gas in the coming months, according to Page.

Trump's tariffs are also prompting concerns about industrial decline, with EU exporters facing a 20 percent levy on all goods they send across the Atlantic.

Lower industrial activity means less demand for fuel. A new analysis from intelligence firm ICIS predicts that gas demand will fall by 3.6 percent this year, with prices also dropping by 3.5 percent.

The new US tariffs could have economic impacts on the scale of the "Great Depression," said Andreas Schroeder, head of energy analytics at ICIS. He added that "the tariffs will have widespread, longer-term implications for European energy markets," with a likely reduction in "spot LNG deliveries into Europe," meaning less business for American producers.

Despite these challenges, EU officials have been in talks with Washington in recent weeks to reach a deal on increasing LNG purchases, though these discussions have yielded little progress. Diplomats have privately expressed frustration that US officials seem uninterested in negotiating, despite concrete offers to purchase more gas.

Trump's $350 billion energy purchase demand, made on April 7, appears to be unrealistic. Buying that much gas would require nearly 16 million barrels a day — more than the US's current total daily output of around 13 million barrels.

"Regarding the $350 billion, what is important is that energy contracts are made based on demand and price, and these are factors that fluctuate," said Anna-Kaisa Itkonen, a spokesperson for the European Commission. "Therefore, it is very, very difficult to peg any comments on one number that has been given from the US side."

By Tamilla Hasanova