Will America Become the Saudi Arabia of Natural Gas?
The war in Ukraine and the breakdown of Europe’s longstanding energy ties with Russia are transforming the world market for natural gas. For now, Europe’s ability to secure alternative supplies depends on the United States’ willingness to take on a new global role that it may be reluctant to play.
OXFORD – With images of Russian aggression and war crimes in Ukraine continuing to dominate the media in Europe and around the world, Germany has pledged to cut its imports of Russian gas by two-thirds by 2023. Even more immediately, Robert Habeck, Germany’s vice chancellor and minister for economic affairs and climate action, now talks of the country reducing its Russian oil imports by half by as early as this June.
But cutting imports of Russian natural gas will take longer. The European Union recently created a new agency to buy gas on behalf of all 27 member states. Its first joint purchase, of some 15 billion cubic meters (bcm) this year, will come from the United States in the form of liquefied natural gas. But that is only a beginning.
Europe cannot quickly shift away from Russian gas, particularly in the industrial sector. Russian President Vladimir Putin’s war on Ukraine will prompt intensified efforts to develop more wind farms and solar facilities across the EU. But renewable energy requires specific improvements in infrastructure, which will take time to finance and put in place. Until battery technology allows power to be stored in substantial volumes, Europe will need gas-powered plants for backup energy supply on days without wind or sun.