US LNG tanker
The concern about having enough energy to get its population through the winter has become an annual cause for alarm in the EU, given that the bloc has to import most of its energy. This winter, however, looks set to be different.
According to data published by Gas Infrastructure Europe, liquefied natural gas (LNG) storage now stands at around 90% capacity with the highest levels being in Austria, Belgium, Czechia, Denmark, France, Germany and The Netherlands.
With LNG prices falling to a ten-year low in July, brought about by increased competition between the US and Russia for a market share in Europe, EU countries are snapping it up.
The United States has aggressively entered the European LNG market spurred on by the American boom in shale gas. While LNG imports were previously limited to Northern Europe, markets in the south have now begun to look across the Atlantic too. Spain has started to significantly increase its imports and Bulgaria received its first US LNG imports back in June.
In fact, since an energy cooperation deal was reached between the EU and the US in July 2018, American LNG exports to the European Union have increased by 272%. Indeed, the EU is now the main recipient of US gas exports.
While long-term gas pipeline supplies are linked to oil prices, spot LNG sales are not. This has created a more volatile pricing situation.
With US LNG still rolling in, gas storage tanks beginning to brim, Europe looks well stocked for the 2019-20 winter season.
The Politics of Energy Security
Concerns over energy security have loomed large over the political agenda in the EU for a long time now, from improving the supranational grid, to environmental policy, to the construction of Nord Stream 2. Since its release in 2014, the European Commission's Energy Security strategy has been the guiding force for legislation within the bloc.
Until recently the fear was that a completed Nord Stream 2 pipeline would lead to an overdependence on Russian gas. Washington has been lobbying hard against the project, rallying Eastern countries, such as Poland, to try blocking the construction. The US argument that importing American LNG would be a geopolitically wiser move was hammered home by US Energy Secretary Rick Perry on his May trip to Brussels. The message in Europe was clear and understood and Mr Perry went back to Washington with orders doubling the US export capacity of LNG or "freedom gas", as it was called at the time.
Shortly thereafter, US President Donald Trump declared that the United States was now an "energy superpower" during a speech he gave at a new LNG export facility in Louisiana.
Nonetheless, the recent surge in imports of American LNG could have the reverse effect to the one intended, making Washington's arguments against Nord Stream 2 appear less pressing. Given that LNG is doing well in the EU, and Gazprom is losing its market share, American imports will be well-placed to compete with gas imports from Russia.
There could also be an impact on relations between the EU and the US. The increase in exports has not come as part of a free trade agreement and at first the US said it would only open up LNG exports if such a deal were to come about. With the previous such deal, known as TTIP, dead in the water, it seems unlikely that this will happen, but nonetheless LNG exports continue unabated.
With the new European Parliament and Commission starting to work together later this year, legislation will be made in a backdrop of low energy prices, full gas tanks and plentiful supply from the US and Russia.
Coming at a critical time in the EU legislative cycle, this may yet prove to be beneficial to the Nord Stream 2 project.
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