Trump's energy politics rattle Europe's gas security

Europe has noticed a significant shift in Donald Trump and his administration's stance toward traditional alliances. The USA has cut Ukraine off from not only financial aid and arms supplies but also access to intelligence. It is also hesitant to offer potential support to NATO countries that do not increase their defence budgets. It argues that a "reset" in US-Russia relations is necessary. All of this is causing serious concern among other allies.

Europe relies heavily on American military systems and equipment. The United States is a major energy supplier to the EU, particularly liquefied natural gas (LNG). This cooperation has deepened as Russia's supply diminishes.

According to data from the Agency for the Cooperation of Energy Regulators (ACER), the European Union purchased about 40 million metric tonnes of American LNG in 2024. According to statements from European Commission President Ursula von der Leyen, the Union is prepared to further increase gas imports from the USA to replace Russian supplies.

As noted in December 2024 by Dr. Kamil Lipiński, Head of the Climate and Energy Team at the Polish Economic Institute, LNG deliveries accounted for about 37% of the EU's gas supplies in 2024. The majority came from the USA, surpassing the supply from the North Sea and the Norwegian Continental Shelf, which stood at 31%.

This may raise the question of whether the EU can still confidently base its energy security on Trump's America, which increasingly acts as a competitor rather than a partner. Meanwhile, after the energy crisis caused by the invasion of Ukraine, Europe has learned that energy resources are as potent a political tool as military capabilities.

Dr. Szymon Kardaś from the European Council on Foreign Relations admits that the notion of a reset with Russia, as mentioned on Thursday by Keith Kellogg, the US Special Envoy for Ukraine and Russia, is alarming, and the warming of relations between Washington and Moscow, while ties with the EU cool, is worrying. Nonetheless, he would not equate the current gas cooperation with the USA with the recent heavy dependence of Europe on Russian resources.

In this matter, I would not be fearful of Trump. He is pragmatic, and gas contracts with Europe are lucrative for the USA. Moreover, there is a fundamental difference between how the gas market functions in the USA and how it is governed in Russia, where the Kremlin or even Putin himself could order Gazprom to shut off the supply. Gas contracts with the USA are made with companies, not the White House. While the administration can impose fiscal or regulatory actions that complicate contracts, there is no risk akin to that in relations with the Russian Federation - argues Dr. Kardaś.

The development of infrastructure to receive liquefied gas has opened up a range of import opportunities for Europe from various sources. Gas is imported into the EU from the USA, Qatar, Algeria, and Russia, although the Union plans to cut off LNG imports from this direction by 2027.

As Dr. Kardaś reminds us, the EU has substantially learned from its past mistakes by restructuring its market and developing supply routes. - Although the role of the USA as an LNG supplier is increasing, dependency is not yet in question. In 2023, American gas accounted for 20% of imports, translating to about 63 billion cubic metres. To compare, he argues that the EU's dependency on Russian gas in 2021 was at 45%, amounting to 155 billion cubic metres.

However, in his view, Europe has a very strong hand and still plays it too timidly. This concerns the feedback from such an arrangement and Trump's transactional approach to politics.

In 2023, deliveries to Europe accounted for 53% of the total LNG export from the United States. This means that Europe as a whole was the most significant market for the USA. This is an often overlooked argument, but it should resonate with Trump - emphasises the analyst.

Additionally, the evolving market benefits the Europeans. According to forecasts by the International Gas Union, which represents the global gas industry, the LNG market is expected to develop rapidly over the coming years, significantly boosting production capacities. The United States itself has announced a doubling of LNG exports by 2030, adding an extra 70 million metric tonnes of liquefied gas.

- Someone will have to purchase this gas. American exporters will be competing with companies from Qatar, Australia, and African countries. The increase in supply will lead to lower prices. This is another argument that the EU market is essential for America - adds Dr. Kardaś.

In a December conversation with money.pl, Dr. Kamil Lipiński from PIE emphasised that the Union could wield greater market power if member nations negotiated gas contracts collectively rather than individually.

- In this light, an intriguing proposal to boost Europe's bargaining power on the gas market was presented in a report by Mario Draghi, who suggested establishing a joint EU LNG purchaser to negotiate contracts with major players in the USA, Qatar, and other third countries - recalled Lipiński.

LNG supplies allow for flexible approaches to gas imports, not tying buyers to a single supplier, unlike pipelines. According to Dr. Kardaś, however, Europe must continue to enhance its capability to acquire energy resources from various suppliers and via diverse routes, including pipelines.

- Norway is a reliable ally, currently covering over 30% of the EU's gas imports. We could also benefit from other directions, such as securing gas from Azerbaijan or via Turkey - he lists.

He highlights that diversification is key to independence. - We should take a leaf out of China's book, which executes a savvy energy policy. They have, on one hand, expanded pipelines to Central Asia but have also established numerous new LNG terminals. This strategy maintains balance and prevents dependency on gas from Russia or other sources - notes Dr. Kardaś.

We can also take inspiration from Japan. The Japanese government acquires stakes in foreign LNG enterprises in exchange for gas supplies at preferential rates. This model is on the EU's agenda, envisaging the possibility for European companies to invest in LNG projects.