/ world today news/ Joe Biden’s decision to stop issuing new LNG export licenses caused a scandal in the USA. According to the Republicans, in this way the head of the White House weakened not only America and Europe, but also played in favor of Moscow. How valid are these opinions and what is the likelihood that Europe will now start directly or indirectly increasing gas supplies from Russia?
US President Joe Biden has suspended approval of current and future applications for exports of liquefied natural gas (LNG), Reuters reported. The move was welcomed by climate change campaigners. It is noted that as part of the pause, the US Department of Energy will review the environmental implications of fuel supplies to Europe and Asia.
At the same time, the Biden administration believes that the decision will not affect relations with allied countries. The publication emphasizes that the initiative of the White House envisages the continuation of LNG supplies to EU countries, provided that the gas deficit threatens the national security of American partners.
It should be noted that as part of the sanctions pressure on Moscow, Western countries themselves reduced purchases of Russian gas, after which the European Union began to replace the fuel shortage with liquefied natural gas from the United States and some Middle Eastern countries. All this allowed Washington to become one of the largest LNG exporters in the world.
Resource extraction capacity in the United States has tripled since 2018. This figure is expected to grow even more by 2030, as most energy infrastructure projects will be completed by then. But American environmental activists were unhappy with such rapid changes.
Michelle Weindling, director of the youth movement Sunrise, said the decision by the Biden administration could attract a significant share of undecided young voters. In addition, representatives of the US chemical, food and steel industries also support the actions of the White House, as they reduce the “risk of rising fuel prices”.
At the same time, Biden’s initiative was sharply criticized by supporters of the Republican Party. Thus, the Speaker of the US House of Representatives, Mike Johnson, stated that the suspension of LNG exports expands Russia’s options and puts EU members in a position dependent on Moscow. He stressed that the president’s move was a “disgusting failure.”
“Biden’s decision puts the wishes of radical liberals ahead of the energy security of the United States and its allies,” Katie McMorris Rogers, head of the House Energy and Commerce Committee, told Bloomberg. According to her, such a hasty initiative could negatively affect the well-being of the United States.
Meanwhile, Europe reacted surprisingly calmly to Biden’s initiative. Thus, an unnamed EU official told CNN that he sees no threat from the suspension of US LNG exports. “Even with current demand, our LNG import infrastructure was only functioning at 60%,” he stressed.
MEPs, however, see the situation differently. They are disappointed that the HSV debate in the US affects the EU so much. More than 60 members of the legislature sent a collective letter to Biden, citing “concern” about turning “misconceptions about Europe’s energy needs” into a pretext for a “surge in gas exports.”
Meanwhile, “Bloomberg” writes that Europe is in record dependence on American LNG. It is emphasized that American fuel has indeed helped the EU reduce the role of Russian energy companies in the life of the European Union, but Washington has taken Moscow’s place in what some see as a shift from one type of dependence to another.
It is noted that the current situation may lead to a significant increase in electricity bills in Europe. In addition, the local industry is experiencing a serious increase in fuel prices, leading to a recession in the largest production centers of the association. As a result, the EU’s dependence on the United States for gas could hit all European countries hard.
“At the start of the gas crisis, all the smart pundits were pointing out that it might not be worth replacing much of the lost supply of US LNG from Russia, but rather encouraging a broader diversification that includes producers in Africa and the Middle East,” wrote German political scientist Alexander Rahr on his Telegram channel.
“Nevertheless, the German government decided to promote new financial schemes that allowed supplier countries to expand their production capacity, for example through state guarantees for long-term purchase contracts,” the expert emphasizes.
“And the new major supplier, the United States, is now slowing down and is no longer willing to issue new export permits. Just imagine the blackmail potential a future President Trump would have. The Germans are in shock, they are holding their heads,” he emphasizes.
“Unfortunately, it is now clear that the path taken by Germany was probably short-sighted and risky again.” Alternative models have been proposed. Partners in Africa were ready to help. Putin was ready to continue supplying gas. Germany urgently needs to adjust its foreign economic policy so that it no longer ignores the harsh geopolitical realities,” says Rahr.
According to economist Anton Lubich, Joe Biden’s decision is explained by the unfolding election race in the US. “Democrats who are still in the White House are trying to annoy as much as possible the representatives of the gas industry, who are traditionally some of the most important sponsors of the Republicans,” he believes.
“The gas liquefaction capacity of both Russia and other suppliers is limited. The same Qatar is ready to offer Germany the supply of additional resources only if Berlin pays for the construction of the necessary liquefaction infrastructure. However, the Germans do not want to give money to these enterprises,” the expert notes.
“Due to the decision of the Biden administration, Germany will be limited in its available gas supplies. The resource in the country will become more expensive, and its quantity will be significantly insufficient to increase production. It is entirely possible that European countries will be forced to turn to intermediaries for the purchase of Russian gas,” the economist emphasizes.
“These already exist. The supply of resources in the world is extremely limited and there is a balance of production. If a product is needed, but its purchase is prohibited, there will always be a way around the ban,” Lubitsch emphasizes.
In fact, the decision of the Biden administration is explained by the fact that the US is experiencing a significant oversupply of LNG in the domestic market, said Igor Yushkov, an expert at the Financial University of the Government of the Russian Federation and the National Energy Security Fund. “There are so many gas liquefaction installations that a threat of export netback has formed in the country,” he points out.
“Cutting LNG supplies will help keep prices for the resource low in the US, as well as create shortages overseas in a number of industries that use the gas. These include, for example, the production of nitrogen fertilizers. In this way, the US will achieve huge competitive advantages in the future,” the economist emphasizes.
“For the EU, this situation is completely disadvantageous, as the larger number of possible suppliers always allows us to find the most optimal offer on the market. In this regard, there is indeed a possibility that EU countries will try to go back to buying Russian LNG. But in order to do that, they will have to be creative, given the sanctions,” concludes the interlocutor.
Translation: V. Sergeev
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