"Freedom gas": US to double LNG exports to EU

Two Liquefied Natural Gas (LNG) orders will be signed in Brussels today by the US energy secretary Rick Perry. The deal is expected to double the US's export capacity to the European Union to an annual amount of 112 million cubic metres as of 2020.

At a press conference in Brussels, Mr Perry said that 75 years after liberation from Nazi occupation, “the United States is again delivering a form of freedom to the European continent... And rather than in the form of young American soldiers, it’s in the form of liquefied natural gas."

When asked by a EURACTIV journalist if the phrase "freedom gas" was a fair description of the American LNG exports to Europe, Mr Perry replied: "I think you may be correct in your observation."

Mr Perry will sign the deals on the sidelines of an EU-US forum on energy being hosted by the European Commission.

“The opportunity for Europe to have a very substantial supportive alternative to Russian gas is on display here,” he said.

The order for LNG comes following a joint statement released in July 2018 by European Commission President Jean-Claude Juncker and US President Donald Trump whereby the two sides agreed to strengthen strategic energy cooperation.

Steven Winberg, assistant US secretary for fossil energy, who accompanied Secretary Perry as part of the US delegation told reporters: “We’re expecting about 8 billion cubic metres per annum of [additional] US LNG into Europe over a 12 month period. We have about 10bcm per annum of capacity right now, so we could in effect double exports to Europe.”

“Perhaps even more relevant is that by 2020, we will go from 50bcm of export capacity to 112bcm per annum – more than doubling capacity in the next 18 months,” he added.

While LNG is notably more expensive than gas pumped along pipelines from Russia and Norway, the two main exporters of gas to the EU, some countries in the bloc, in particular Poland and the Baltic nations, are prepared to pay a premium to have more diversified supplies.

Other nations are still hedging their bets. Bulgaria, which at present imports 100% of its gas from Russia, said that it would import gas from the US if the price was competitive, suggesting that a US government fund of $1-billion could bring the price down.

Secretary Perry was quick to disavow any form of government interference over pricing, saying that it was down to individual companies to sign deals.

The US Ambassador to the EU, Gordon Sondland, said that the US was "competing against a state actor which is heavily subsidised,” in reference to the Russian state-owned Gazprom, adding that "the more volume we do, I think the price will come down naturally.”

The EU-US deal over LNG exports will be seen as a further blow to the economic clout of Nord Stream 2, the controversial Russian-German gas pipeline project across the Baltic Sea that is dividing EU actors and is seen by some as an attempt by Russia to exert influence across the continent.

The US has been vehemently against the Nord Stream 2 project and has threatened to impose sanctions on European firms that participate in the project. “The idea that sanctions are available is still very much a reality,” Perry warned.

“It makes it more and more economically unfeasible,” Perry added, “When you get a 20 year contract signed for LNG and you know that the product is going to be delivered in a timely fashion over the next 20 years, why would you want to go to another source of energy?,” he asked.

“Russia will cut off your gas in a moment’s notice if you’re not following their political direction,” he added,  in reference to a dispute between Ukraine and Russia over transit fees, which left Europe in a gas crisis during the winter of 2006-07.

“We are not for Nord Stream 2,” Perry said, adding it was “a bad idea to have a single source of supply. Every day that Nord Stream 2 is not completed is another day that the EU has more options for their future natural gas supplies,” he added.

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