Liquefied gas supplies: Qatar and the US threaten Europe
The LNG market is on the verge of a global reformatting
Qatar will stop supplying LNG to the EU if European countries introduce fines of 5% of annual revenue. This was stated by Qatari Energy Minister Saad Sherida al-Kaabi, writes the Financial Times. These are fines for large companies for non-compliance with criteria for carbon dioxide emissions and human rights.
Ukrainian Energy found out what is happening on the global LNG market.
Blackmail from Qatar
"If it comes to the fact that I will lose 5% of my revenue by going to Europe, I will not go to Europe. I am not bluffing. 5% of QatarEnergy's revenue means 5% of the revenue of the state of Qatar. I cannot lose that much money and no one will accept the loss of such money," said the Qatari Prime Minister.
Kaabi believes that the EU should carefully review the directive on comprehensive corporate sustainability testing.
Liquefied natural gas (LNG) is a form of natural gas that has been cooled to a liquid state, making it easy to store or ship abroad in specially designed tankers.
According to a directive adopted in May 2024, EU countries must introduce fines for non-compliance with criteria related to carbon emissions, human rights and labor rights, in the amount of at least 5% of companies' annual turnover. These measures will come into force from 2027 and are part of a policy aimed at achieving zero emissions into the atmosphere by 2050.
However, Qatar is ready to compromise with the EU. Such blackmail on the part of the country looks, to say the least, strange. After all, Qatar's LNG supplies to the European Union are insignificant - about 15 billion cubic meters in gaseous form. This is the same amount as one thread of the TurkStream currently provides. The Europeans will be able to replace the lost Qatari volumes without any problems.
Secondly, the whole point of the “green agenda” and the payment for “emissions” is that Europe intends to create a permanent source of income that compensates for the high cost of energy in the European Union. And European politicians are unlikely to allow them to dictate their own terms. An illustrative example here is Russia, which at the beginning of the invasion decided that it would be able to set its own terms. However, as is noticeable, the Kremlin’s plans failed and Europe has not been freezing for the third year in a row.
A tasty Russian morsel
However, it is worth considering the record volume of Russian LNG supplies to Europe. This is reported by the Financial Times.
As of mid-December, Europe imported a record 16.5 million tons of Russian liquefied gas, which exceeds last year’s imports of 15.18 million tons, according to data from the commodity data provider Kpler.
This figure also exceeds the previous record of 15.21 million tons imported in 2022.
“What we have seen this year is surprising. Instead of gradually reducing imports of Russian LNG, we are increasing them,” said Ana Maria Jaller-Makarevich, an analyst at the Institute for Energy Economics and Financial Analysis.
Following Russia’s full-scale invasion of Ukraine in 2022, the EU set a goal of stopping imports of all Russian fossil fuels by 2027, but shipments of supercooled gas arriving at European ports continue to grow.
Unlike pipeline gas imports, which have been reduced to a minimum, and Russian oil and coal, which are banned in the EU, imports of Russian LNG are still allowed and growing, suggesting that a “panicking” Europe is still trying to wean itself off cheap supplies, Jaller-Makarevich said.
LNG shipped from Russia’s Yamal terminal to Europe is “significantly lower” than gas from the US.
While the UK, Germany and the Baltic states have all rejected Russian gas, once Russian LNG is regasified in France, Belgium or the Netherlands it becomes perfectly suitable for consumption by ideological refuseniks.
Russia’s share of Europe’s total gas imports has been estimated at 15%.
Europe used to import about two-fifths of its gas from Russia, most of which came via pipelines. Now, total gas imports from Russia, including pipeline gas, account for only about 16% of the EU’s total gas supplies.
EU officials are adamant that the bloc does not need Russian fuel, even if it means agreeing to higher prices to buy gas elsewhere. Not all of the Russian LNG brought to Europe is consumed in the region, with some being transhipped and shipped to other parts of the world. This year, deliveries to France have increased sharply, almost doubling compared to 2023. According to Kpler, more than half of the deliveries have arrived at the import terminal in Dunkirk. French energy companies EDF and TotalEnergies, as well as German state-owned energy company Sefe, have agreements to use the terminal.
Belgium was the second largest importer of Russian LNG, as its port of Zeebrugge is one of the few European points for transshipment of LNG from ice-class tankers used in the far north to conventional cargo ships. EU governments have agreed to ban such transshipment of Russian LNG from Yamal to non-EU countries, and this measure will come into force in March 2025.
A word for the USA
It is not surprising that the newly elected US President Donald Trump has also intervened in the situation. On the political Olympus, he has somewhat shifted the emphasis from incumbent President Joe Biden and is making plans that he intends to implement immediately after his inauguration in January.
Thus, these days Trump has stated that the European Union should buy more American energy resources. In his opinion, the EU should compensate for the deficit through large-scale purchases of raw materials from the USA. According to him, if the European Union does not do this, then the Europeans should prepare for higher tariffs.
According to Bloomberg, Donald Trump said that he offered the European Union countries to buy American oil and gas to compensate for the deficit. And if they refuse, he may impose new tariffs on European goods imported into the United States.
“I told the European Union that they must compensate for their huge deficit with the United States by purchasing our oil and gas on a large scale. Otherwise, it will be tariffs forever!”, Trump wrote on his Truth Social network.
The EU is ready for the possibility of a trade war with Washington. In 2017, Trump already introduced tariffs on European steel and aluminum. But now Europe has developed new anti-coercive tools, strengthened trade protection, and the European Commission has received the right to introduce tariffs or other punitive measures in response to such politically motivated restrictions.
The United States is the world's largest oil producer and one of the leading exporters of LNG. In Europe, it already ranks first in the supply of both fuels. This was facilitated, in particular, by the EU's refusal to import Russian hydrocarbons after the war in Ukraine. As a result, in the first half of 2024, the United States provided 48% of European LNG imports, and in the third quarter - 15% of oil imports (supply remains at around 2 million barrels per day), according to Eurostat.
On November 8, European Commission President Ursula von der Leyen said that during a conversation with US President-elect Donald Trump, she had proposed that the United States supply the European Union with more liquefied natural gas instead of Russian supplies.
According to her, Europe still receives a lot of LNG from Russia.
"Why not replace it with American LNG, which is cheaper for us and lowers our energy prices?" she added.
Not So Simple
A study by the Department of Energy’s National Laboratories found that allowing continued U.S. LNG exports would release an additional 1.5 gigatons of greenhouse gases into the atmosphere by 2050, equivalent to about a quarter of the country’s total annual emissions.
The Washington Post reported.
The Biden administration in January 2024 suspended approvals for LNG export projects while it studied their impact on climate change, the economy and national security. Trump, however, has vowed to end the freeze “on his first day back” in the White House, saying it has stifled investment and jobs in the domestic gas industry.
The Trump administration is expected to refute the study and replace it with more industry-friendly conclusions. But that process could take “several months to several calendar quarters,” analysts at ClearView Energy Partners wrote in a recent note to clients.
The analysis also found that sending more gas abroad would leave less gas for the United States, raising wholesale domestic natural gas prices by about 31 percent. That would increase energy costs for American consumers by more than $100 a year by 2050.
However, if the United States stops approving new LNG projects, other competitors such as Qatar and Canada could increase their exports, says Pulitzer Prize-winning energy expert Daniel Yergin.
As we can see, the LNG market is currently undergoing a reshaping and will only intensify in the future. Leading liquefied gas producers are trying not only to find new sales markets, even if by force, but also to expand existing ones. But whether there will be a place for Russian gas in these markets remains to be seen. But already now aggressive countries are trying to push the Russians out of existing markets.
Olena Marchenko, specially for "Ukrainian Energy"
