Europe shows it's getting serious about buying U.S. LNG

August 9, 2018

LONDON and NEW YORK (Bloomberg) -- European nations are far behind Mexico and China when it comes to receiving liquefied natural gas from the U.S., but the region is making its biggest effort to date to change that.

European Commission trade officials will travel to Washington on Aug. 20 to follow up on an energy agreement last month between the Commission’s President Jean-Claude Juncker and U.S. President Donald Trump. Europe pledged to import more LNG in a bid to diversify imports, while America is seeking new markets for its expanding production of the fuel. Russia is currently Europe’s biggest supplier.

“The European Union is ready to facilitate more imports of liquefied natural gas from the U.S. and this is already the case as we speak,” Juncker said in a statement on Thursday. “The growing exports of U.S. liquefied natural gas, if priced competitively, could play an increasing and strategic role in EU gas supply.”

Europe received about 10% of total U.S. exports last year, up from 5% in 2016 after the American shale gas revolution went global with the opening of the Sabine Pass export facility on the country’s Gulf of Mexico coast. Since then, Europe has imported more than 40 LNG cargoes from the U.S., or 2.8 Bcm, the Commission said.

Still, that’s just a fraction of Europe’s demand of almost 550 Bcm last year. Most gas arrives by pipelines from Russia and Norway, as well as in LNG tankers from Qatar, the biggest producer of the super-chilled fuel. As the region’s own fields deplete and nuclear and coal plants are decommissioned, demand for the fuel is rising.

European buyers are taking a closer look at U.S. gas after Brent oil futures, a key pricing component for much of the LNG sold across the globe, soared to a 3 1/2-yr high earlier this year, Greg Vesey, CEO of Liquefied Natural Gas Ltd., said Wednesday in an interview in New York.

Russian gas supplies to Europe are also linked to crude, and moves in the commodity affect gas prices at the region’s hubs. U.S. supplies, in contrast, are tied to low-cost shale gas at the benchmark Henry Hub in Louisiana...

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