March 25, 2022
By Jarrett Renshaw, Vera Eckert and Joseph Nasr
The Astora natural gas depot, which is the largest natural
gas storage in Western Europe, is pictured in Rehden, Germany, March 16, 2022.
REUTERS/Fabian Bimmer
·
Summary
·
·
U.S. will work to
supply 15 bcm of LNG to EU this year
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Russia wants payments
for gas in roubles, not euros
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Gazprom has four days
to facilitate the shift
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Germany says it can't
wean off Russian gas until summer 2024
BRUSSELS/BERLIN, March
25 (Reuters) - The United States will work to supply 15 billion cubic metres of
liquefied natural gas (LNG) to the European Union this year to help it wean off
Russian energy supplies, the transatlantic partners said on Friday.
The EU is aiming to
cut its dependency on Russian gas by two-thirds this year and end all Russian
fossil fuel imports by 2027 due to Russia's invasion of Ukraine. Russia
supplies around 40% of Europe's gas needs.
Concerns over security
of supply were reinforced this week after Russia ordered the switch of gas
contract payments to roubles, raising the risk of a supply squeeze and even
higher prices. read more
Senior U.S. administration
officials did not specify what amount or percentage of the extra LNG supply
would come from the United States.
U.S. LNG plants are
producing at full capacity and analysts say most of any additional U.S. gas
sent to Europe would have to come from exports that would have gone elsewhere.
"It normally
takes two to three years to build a new production facility, so this deal may
be more about the re-direction of existing supplies than new capacity,"
said Alex Froley, gas and LNG analyst at ICIS.
LNG under contract
cannot be easily redirected. Already high European gas prices would have to
rise further to attract those cargoes to the 27-nation bloc, analysts said.
Even if the 15 bcm is
achievable, "it still falls well short of replacing Russian gas imports,
which amounted to around 155 bcm in 2021," analysts at ING Bank said.
GERMAN RELIANCE ON RUSSIA
U.S. President Joe
Biden and European Commission President Ursula von der Leyen also announced a
plan to form a task force to cut Europe's reliance on Russian fossil
fuels. read more
The Commission will
work with EU countries to ensure they are able to receive about 50 bcm of
additional U.S. LNG until at least 2030. U.S. LNG exports to the EU last year
were about 22 bcm.
The EU has already
stepped up efforts to secure more LNG after talks with supplier countries,
resulting in record deliveries of 10 bcm of LNG in more than 120 vessels in
January.
Meanwhile Germany, the
EU's biggest importer of Russian gas, said it has made "significant
progress" towards reducing its exposure to imports of Russian gas, oil and
coal.
However, Economy
Minister Robert Habeck also said it could take until the summer of 2024 for
Europe's largest economy to wean itself off Russian gas. read more
German utilities on
Thursday said their country needed an early warning system to tackle gas
shortages as companies and EU nations scrambled to understand the ramifications
of Russian President Vladimir Putin's demand for gas payments in roubles.
That demand still
needs to be backed by a concrete mechanism. Putin has ordered Russian energy
giant Gazprom (GAZP.MM) to work out how payments for gas can be
accepted in roubles in the next four days, the Kremlin said. read more
However, a German
ministry spokesman said utility companies are obliged to comply with contracts
with Russia stipulating they pay for oil and gas in dollars and euros.
"This is a matter
of private law, namely of contract compliance. Most supply contracts are in
dollars and euros, so ensuring compliance is first of all the duty of energy
providers acting as importers," the economy ministry spokesperson said.
Two sources said on
Friday that Gazprom has asked India's largest gas transmitter GAIL
(India) (GAIL.NS) to pay for gas imports in euros instead
of dollars. read more
Reporting by Jarrett
Renshaw in Brussels, Joseph Nasr in Berlin, Vera Eckert in Frankfurt, Nina
Chestney and Marwa Rashad in London; Writing by Philip Blenkinsop and Nina
Chestney; Editing by Barbara Lewis, Jason Neely and Jan Harvey
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