U.S. LNG Exports to Europe Sets Record

The U.S. has been exporting larger quantities of liquefied natural gas (LNG) to Europe recently, a trend that is likely to continue. Following the Russian invasion of Ukraine in 2022 and subsequent sanctions on Russian energy, the EU hurried to shift its reliance away from Moscow. Many countries turned to the U.S. to fill the gap and have not looked back since. In recent months, export figures have been driven even higher due to the cold winter temperatures being seen across Europe.

The Shift Away from Russian Gas

After Russia invaded Ukraine in February 2022, the U.S. and EU quickly introduced sanctions on Russian energy, despite Europe’s heavy dependence on Russian oil, gas, and uranium. The EU sections on Russia’s energy sector include a price cap relating to the maritime transport of Russian oil and petroleum products, and bans on:

• imports from Russia of crude oil, petroleum products and coal
• imports from Russia of liquified petroleum gas (LPG) 
• re-exports of Russian liquified natural gas (LNG) in EU facilities
• exports to Russia of goods and technologies for the energy industry
• the provision of gas storage capacity for Russian nationals
• new investments in Russia’s energy and mining sectors
• new investments in Russia’s LNG projects

Sanctions have been tightened since 2022 as Europe has gradually weaned itself off Russian gas and other energy products. 

In January, Russian gas finally stopped being transported to EU states via Ukraine following the expiration of a five-year deal, bringing an end to a decades-long arrangement. The European Commission said that the EU had diversified its supplies to prepare for the change, although some Eastern European states, such as Slovakia, are expected to experience shortages. Russia continues to transport gas to Turkey and Serbia via the TurkStream pipeline in the Black Sea.

Russia contributed around 40% of the EU’s gas imports in 2021, a figure that fell to less than 10% in 2023 following the imposition of sanctions and a shift to other suppliers. 

Poland, which was a heavy importer of Russian gas, now gets its supplies from the U.S., Qatar, and the North Sea. Most EU countries are thought to have access to alternative supplies with the European Commission laying out plans to entirely replace gas transiting through Ukraine in December. 

Winter Demand Boost

In recent months, U.S. exports of LNG to Europe have risen significantly as cold weather increased demand. Following two consecutive milder winters, Europe is experiencing its first extended cold spell since 2022. 

In December, half of the 10.89 million metric tonnes (MT), imported by the EU came from the U.S. Meanwhile, in January, almost nine out of every 10 cargoes leaving the U.S. were destined for Europe, with 7.25 million MT, or 86%, going to Europe, compared to 5.84 million MT, or 69%, in December. 

The increased gas demand in Europe has led to reduced inventories. The region now needs to increase its overseas supply for the rest of the cold months, as well as to fill up storage sites for next winter. The U.S. is expected to help fill this gap with its rising production and export capacity, as the world’s largest LNG exporter. 

Venture Global’s second facility, Plaquemines LNG, commenced operations in January and  Corpus Christi Stage 3 produced its first gas in December. U.S. LNG exports rose to a record high of 8.5 million MT in December, increasing the annual total by 4.5%. Exports are expected to climb by 15% in 2025 thanks to the increase in capacity, according to the U.S. Energy Information Administration. 

Tariffs Threat

The EU has significantly shifted its reliance on gas away from Russia to other markets, principally the U.S. The increase in LNG production and export capacity from the U.S. reassured Europe and other regions of the world, such as Asia, that it would remain a key trade partner for decades to come. However, in recent weeks, President Trump stated that he is considering the introduction of tariffs on the EU if the bloc does not increase its import of U.S. gas. 

On his first day as President, Trump was asked what the EU could do to avoid tariffs, to which he replied: “The one thing they can do quickly is buy our oil and gas.” 

The President of the European Commission, Ursula von der Leyen, previously stated her support for buying more U.S. LNG to shift away from Russia. “Why not replace it by American LNG, which is cheaper for us and brings down our energy prices?” she said in November. However, recent remarks from Trump may encourage Europe to reconsider as the threat of trade tariffs looms. 

In February, Trump hinted that the EU could be next to face tariffs after he introduced (and then temporarily rescinded) 25% levies on Mexican and Canadian goods. When asked whether there was a timeline for introducing EU tariffs, Trump said: “I wouldn’t say there’s a timeline, but it’s going to be pretty soon.” 

There is now talk of tariffs on certain goods from both sides, with the EU responding to Trump’s statements with reciprocal tariff plans. This has the potential to change U.S.-EU trade relations dramatically in the coming months and years. 

The EU has gradually increased its reliance on the U.S. for its gas imports, shifting dependence away from Russia. This shift was expected to help boost long-term energy trade relations between the two powers, with U.S. LNG exports to Europe increasing significantly over the last year. However, the recent threat of tariffs on the EU by President Trump has made the outlook more uncertain. 

Stay In The Know with Shale

While the world transitions, you can count on Shale Magazine to bring me the latest intel and insight. Our reporters uncover the sources and stories you need to know in the worlds of finance, sustainability, and investment.

Subscribe to Shale Magazine to stay informed about the happenings that impact your world. Or listen to our critically acclaimed podcast, Energy Mixx Radio Show, where we interview some of the most interesting people, thought leaders, and influencers in the wide world of energy.