March 12, 2019 (11:21)

EU-US cooperation in the energy sector is enhancing

On March 8, 2019 in Brussels, the European Commission Spokesperson for climate action and energy, Anna-Kaisa Itkonen, made a statement on the results of the implementation of the Joint U.S.-EU Statement on strategic cooperation with respect to energy, signed on July 25, 2018 by the President of the European Commission J.Juncker and US President D.Trump. According to Anna-Kaisa Itkonen, since the signing of the statement, the export of US liquefied natural gas to the EU has grown by 181%. From the beginning of this year, liquefied gas from the United States amounted to 12.6% of the total LNG import into the EU. The US now ranks third on this indicator after Qatar and Nigeria.

Anna-Kaisa Itkonen emphasized that the EU has already allocated EUR 656 million of its budget to co-finance the development of European LNG infrastructure and support the development of 8 new LNG projects, the implementation of which will increase the total capacity of European LNG regasification terminals by 22 billion cubic meters of gas per year by 2023 (from 240 to about 260 – 265 billion cubic meters per year). As estimated by the European Commission, LNG imports into the EU should increase by additional 20% by 2040 (compared with 2016).

 Ms. Itkoneen said that this year, on May 2, a high-level forum of the EU-US Energy Council entitled “Ways to increase US LNG exports to the EU gas market: competitive pricing, infrastructure investments and technological innovations” will be held in Brussels, where the parties will determine further steps of deepening EU-US energy cooperation, simplifying bilateral energy trade procedures, enhancing bilateral technological cooperation, etc.

Recently (March 6-7) the European Commission delegation headed by EU Commissioner for Trade, Cecilia Malmström and European Commission Secretary General, Martin Selmayr, visited Washington, where officials held a working meeting with the US Trade Representative, Robert Lighthizer. The parties discussed enhancing of the transatlantic trade between the EU and the US, simplifying the procedures for export of LNG from the US to Europe and cooperation on the reform of the WTO. According to M. Selmayr, in the period from July 2018 to March 2019, the EU has already imported 7.9 billion cubic meters of gas from the US, among which 3.3 billion cubic meters were imported in 2018 (2.2 billion cubic meters of gas in 2017), and in the case of a simplified US licensing system for LNG exports to Europe, these volumes will grow. M. Selmayr noted that the EU is ready to continue to increase the volume of LNG imports from the US under market competitive conditions. He stressed that in January-February 2019 the EU had already received 1.9 billion cubic meters of LNG from the US (in the same period of 2018 this figure was only 102 million cubic meters).

Robert Lighthizer, in his turn, noted that at present, the United States produces about 39 billion cubic meters of LNG annually and in 2023 this figure should increase to 80 billion cubic meters of LNG per year. Consequently, the EU market for the US, in the context of gas exports, is one of the highest priorities. So, since 2016, the US has already sent 85 LNG tankers to the EU. In 2017, LNG exports to the EU amounted to 10% of the total LNG exports of the US, and in 2018 it amounted to 11%.

According to James Henderson, director of research of the gas market of the American non-governmental organization “Oxford Institute for Energy Studies”, the increase in US gas exports to the EU in 2018 contributed to the drop in LNG prices in Asian markets. For gas traders, the EU market, where the price of gas in most cases is lower than in Asia, is still considered according to leftover principle. The interest in the EU market for American exporters increased slightly only after China introduced 10% of the customs duty on natural gas from the United States.

Consequently, the US exported to the EU 7.9 billion cubic meters of LNG in 2016-2019, which represents about 12% of the total EU LNG import. This amount includes 1.9 billion cubic meters of gas exported from the beginning of 2019. Since mid-2018, the parties are engaged in an intensive dialogue aimed at substantial increase of the volume of US LNG inflows into the EU. Currently installed in the US production facilities allow about 39 billion cubic meters of LNG for export to foreign markets. In 2023, this figure will increase to 80 billion cubic meters of gas per year. Consequently, US LNG exporters may in the short term significantly (up to 10-15 billion cubic meters of LNG per year) increase LNG exports to the EU.

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