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The EU’s mysterious Russian gas plan — and what it means for US LNG exports

Spluk.ph by Spluk.ph
May 13, 2025
in Business & Economy
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The EU’s mysterious Russian gas plan — and what it means for US LNG exports
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This text is an on-site model of our Vitality Supply e-newsletter. Premium subscribers can join here to get the e-newsletter delivered each Tuesday and Thursday. Commonplace subscribers can improve to Premium here, or explore all FT newsletters

Howdy and welcome to Vitality Supply, coming to you from New York and Brussels.

Oil costs settled at a two-week excessive on Monday, amid hopes {that a} full-scale commerce struggle between China and the US could also be averted following a deal between the two nations to chop tariffs, not less than quickly.

Rising optimism among investors concerning the potential détente between the world’s two largest economies additionally pushed up the worth of world inventory markets and the US greenback.

Staying with China, my FT colleagues revealed a Huge Learn on how President Xi Jinping has sparked an electricity revolution that’s tackling an important vulnerability within the Asian nation: reliance on overseas power.

China is on its technique to changing into the world’s first “electrostate”, with a rising share of its power coming from electrical energy and an financial system more and more pushed by clear applied sciences, they write. It presents Beijing a strategic buffer from commerce decoupling and rising geopolitical tensions with the US.

The nation isn’t solely quickly advancing in the direction of self-sufficiency in power from safe home sources, but additionally wields huge energy over the markets for the sources and supplies that underpin applied sciences of the long run.

For our predominant merchandise at this time, Alice Hancock decodes what Brussels’ new Russian gasoline plan might imply for US LNG exporters.

Thanks for studying, Jamie

What the EU’s mysterious Russian gasoline plan means for US exporters

The longer term might go considered one of two methods for US liquefied pure gasoline exporters.

If an EU proposal to phase out all Russian gas imports by 2027 goes to plan, closing funding choices on 45.5mn metric tons per yr of US LNG capability may very well be taken this yr and subsequent, in accordance with S&P International figures revealed final Thursday.

But when it doesn’t and there was even a “modest” return of Russian pipeline gasoline to Europe, alongside imports from Russia’s gasoline facility Arctic LNG 2, which has been topic to US sanctions, S&P warns that $120bn of funding within the US trade could be in danger.

The US accounts for a few fifth of EU LNG imports. Ryan Peay, a US Division of Vitality official, mentioned this week that Washington anticipated US LNG exports to double by the early 2030s.

“The way forward for Russian gasoline provides stays the important thing uncertainty for US market opening,” S&P mentioned.

The essential concern for the US LNG trade is whether or not the EU’s plan will truly work.

The naked bones of what the European Fee is branding its “street map” to part Russian fossil fuels out of the EU system by 2027, revealed final week, are: implementing extra disclosure of details about contracts with Russian suppliers; requiring all EU member states to submit plans for the way they are going to part out Russian gasoline and oil; and prohibitions on spot contracts by the top of this yr and long-term contracts by 2027.

The issue with the long-awaited plan is that nobody exterior the fee is bound that it’s going to safely permit corporations to interrupt contracts with Russian suppliers with out having to pay heavy compensation. Business executives and ministries alike are involved concerning the authorized threat.

“The legally most rock-solid technique to ban Russia’s remaining power imports could be sanctions, however that route is barred because of it requiring unanimous approval by all EU governments,” Elisabetta Cornago, senior analysis fellow on the Centre for European Reform, informed Vitality Supply, noting that the pro-Russian governments Hungary and Slovakia would block any sanctions.

The fee has advised that it has discovered a workaround that will solely contain a weighted majority of member states to agree and has promised to current the proposal in June.

In March 2022, EU nations dedicated to part out imports of Russian coal, oil and gasoline “as quickly as potential”, following Moscow’s full-scale invasion of Ukraine in February 2022. Since then, in accordance with one EU official, “we’ve not performed a lot else than engaged on authorized prospects to restrict imports on Russia . . . how we are able to do that in a protected method, in a fashion that’s legally strong, that avoids litigation dangers, that avoids financial dangers for the market contributors and suppliers”.

“We all know very a lot what we take into account,” the official added, declining to provide additional particulars.

Member states are mystified. 

“We have now been trying into it ourselves for over two years now and we actually haven’t discovered one thing that would work aside from sanctioning or a type of sanctions,” one European official mentioned.

A method could be to argue that for the reason that begin of the struggle, the regulatory framework within the EU has made it tougher to proceed contractual obligations as per enterprise as normal, so this may justify a “drive majeure” interruption of contracts, mentioned Cornago.

However, she added: “This technique isn’t with out dangers, as corporations strolling out of contracts could be concerned in expensive arbitration.”

EU diplomats have advised that the concept of implementing extra transparency out there will assist hint the molecules and put stress on consumers. Nevertheless it won’t quantity to a authorized foundation for a ban.

Firms, akin to Sefe, the German power firm that imports Russian LNG, have mentioned they have been analysing the fee’s doc. Markets barely responded to its announcement having largely priced in an entire phaseout of Russian gasoline. Costs moved very barely increased final Tuesday following the announcement to €36.05 per megawatt hour however have come again right down to underneath €35/MWh. 

The EU plan was introduced as discussions are working concurrently about how Brussels might guarantee the US that EU corporations will purchase extra LNG from throughout the Atlantic as a part of an effort to decrease the bloc’s commerce deficit and placate President Donald Trump.

A number of concepts have been advised, together with utilizing the EU’s joint gasoline shopping for programme to collate demand and current it to the White Home as a sign of how a lot gasoline the bloc might purchase.

Marco Alverà, chief govt and co-founder of Tree Vitality Options, which operates considered one of Europe’s largest LNG terminals, has been lobbying a number of EU commissioners for the bloc to have a “strategic gasoline reserve” that would “underwrite extra long-term LNG purchases and assist commerce discussions”.

Chris Treanor, govt director of Web page, a coalition of US LNG producers, mentioned that the EU street map ought to have signalled an acceleration of “efforts to advertise low-methane, long-term, versatile LNG contracts, together with from the US”.

Dan Jørgensen, the EU’s power commissioner, informed Vitality Supply that it was “too early” to invest on how the fee would current its curiosity.

One EU diplomat noticed that the 45.5mn metric tons per yr of US capability that S&P projected might come on-line would possibly develop into the sufferer of its personal success: “There are plenty of questions on all the brand new LNG tasks or liquefaction services in america, as a result of by some means if there are too a lot of them the funding case can be decrease as a result of [more of them] convey the costs down.” (Alice Hancock)

Energy Factors

  • Donald Trump seeks bromance and billions as he travels to the Gulf, with excessive expectations of securing a variety of multibillion-dollar offers.

  • Aanu Adeoye stories on the Nigerian corporations main a historic shift in oil wealth possession, as overseas majors retreat from the African nation.

  • Vitality teams have scrapped Texas-backed gas power plant projects amid turbine delays and spiralling prices.


Vitality Supply is written and edited by Jamie Smyth, Martha Muir, Alexandra White, Tom Wilson and Malcolm Moore, with assist from the FT’s world crew of reporters. Attain us at energy.source@ft.com and comply with us on X at @FTEnergy. Compensate for previous editions of the e-newsletter here.

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