Due to the war in Ukraine, Europe takes a turn and for the first time buys more gas from the US than from Russia

War is an accelerator of history, a machine for altering traditions etched in fire, for breaking trends. Its human, political, economic or military consequences cause political earthquakes. Europe is living these months big changes.

In a few months it received more than 4.5 million Ukrainian refugees. After three decades of cutting military spending in recent months, he has vowed to reverse that trend and re-strengthen his armed forces. Inflation returned (in June the Eurozone closed with an interannual rate of 8.6%) to levels not seen since the oil crises of the 70s of the last century.

The last big change is energetic. In a few months the Europeans have promised to progressively stop buying Russian coal, oil and gas. What the Cold War never prevented, not even in its most tense moments, that Russian hydrocarbons circulate towards Europe, is prevented by Vladimir Putin’s war in Ukraine.

historical milestone

This week, as the war entered its fifth month, data from the International Energy Agency showed that for the first time in history, Europeans are buying more American liquefied natural gas than Russian gas.

The change also does for the United States to boost production and center it on Europe. According to the same source, in April 54.1% of its liquefied gas exports went to just five countries: France, Spain, the United Kingdom, the Netherlands and Poland.

Liquefied natural gas is processed to ship in liquid form. It is transported in special vessels at -162 degrees Celsius. These conditions make it occupy 600 times less than at the time of consumption.

The European change of gas suppliers is so fast because in several countries of the old continent there was surplus capacity to regasify liquefied gas that arrives in methane tankers. Europe used in 2021 only 45% of its regasification capacity.

It was not bought as much from the United States or from other producers such as Nigeria or Qatar and it continued to be imported through gas pipelines from Russia, mainly by price reasons. Now, when the priority is to stop buying it from Moscow so as not to finance Putin’s war, the Europeans no longer look so much at the price.

A gas pumping station near Strasswalchen, in Austria, where Russia’s Gazprom operated until now. Photo: AFP

Gas, Vladimir Putin’s political weapon

The drop in Russian gas exports (which cannot be diverted to other destinations so easily in the short term because the global availability of methane tankers and regasification plants is very limited) has already been recognized by Moscow.

According to an agency cable, Gazprom reduced its gas production by 8.6% in the first half of the year and 31% exports to countries that were not members of the Soviet Union. Europe accelerates that fall.

Gazprom’s June exports were 75% lower than in May. And they will go further because the Kremlin also uses gas supplies as political weapon.

The less there is available, the more the price rises and the more it affects the European economy. In July, he plans to close the Nord Stream I, which connects Russia and Germany through the Baltic seabed, for maintenance activities that were not scheduled until weeks ago.

Gazprom is also beginning to feel the cold. The company, Russia’s largest by stock price and by revenue, announced on Thursday that it will not pay dividends on its 2021 earnings.

The company assures that its priorities are “to apply the investment program, including the gasification of the Russian regions and the preparation of the winter. And obviously we have to be prepared to pay higher taxes.”

Why Putin has to finance the war somehow. The announcement made the company drop 27% on the stock market only on Thursday.

Europe’s problem is the American production and export capacity. By the end of 2021, Europeans were importing more than 10.5 trillion cubic feet of natural gas from Russia. Now less than 5 billion and the trend is accelerating. US liquefied natural gas has gone from just over 2 trillion to close to 5 trillion, but has been at those levels since March.

These data have led the International Energy Agency to warn Europeans on several occasions that they may have supply problems in the coming autumn and winter.

You have to fill up to at least 80% of your reserves (they are close to 60%), reduce your consumption and prepare for, when winter comes, start applying rationing measures.

Brussels, special



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