US, EU agree on major deal to reduce Europe’s dependence on Russian gas

The US and the European Union (EU) have struck a major deal for the supply of liquefied natural gas (LNG) to Europe in a bid to reduce the region’s dependence on Russian gas amid the ongoing war in Ukraine.

The new deal will see the US provide EU member states with a total of 15 billion cubic metres of LNG by the end of 2022.

The deal was announced on Friday during US President Joe Biden’s trip to Europe, where the 79-year-old, along with European Commission chief Ursula von der Leyen, announced the formation of a joint task force to reduce Europe’s dependence on Russian gas.

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“We’re coming together to reduce Europe’s dependence on Russia’s energy. We should not subsidise Putin‘s brutal attack on Ukraine,” Biden told reporters ahead of the deal’s announcement.

“As you know, we aim to reduce our dependency on Russia. The US commitment to provide the EU with [an] additional at least 15 bcm (billion cubic metres) of LNG this year is a big step in this direction. We are determined to stand up against Russia’s brutal war,” von der Leyen said, announcing the deal.

As it stands, Russian gas supplies account for 40% of Europe’s annual LNG consumption, which is around 216 billion cubic metres of LNG.

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Given Europe’s energy demands – the region consumed 540 billion cubic metres of LNG in 2020 – the US-EU deal is unlikely make a dent immediately, but von der Leyen said that the long-term aim of the deal is to ensure a supply of at least 50 billion cubic metres of gas from the US annually until 2030.

However, experts and analysts say that US LNG production plants are already operating at full capacity, and the promised gas supply to Europe thus has to come from gas exports that would have otherwise gone to various other parts of the world.

Given the fact that US gas supplies to various parts of the world are under contract, redirecting supplies to Europe may not be a straightforward matter, Reuters reported.