By America Hernandez, Riham Alkousaa, and Marwa Rashad
PARIS/BERLIN (WARINFO) – Over three years since Russia invaded Ukraine, Europe’s energy security remains precarious.
During the 2022-2023 energy crisis, U.S.-produced liquefied natural gas played a crucial role in filling the void left by Russia’s reduced supplies across Europe.
However, since President Donald Trump has upended relations with Europe that were formed post-World War II and shifted towards using energy as leverage in trade talks, companies are concerned that depending on the United States may have introduced additional risks.
In light of these circumstances, leaders at prominent European Union companies have started voicing opinions that would have seemed inconceivable just twelve months prior: that acquiring some natural gas from Russia, including from the Russian state-owned behemoth Gazprom, might not be such a bad notion after all.
This would necessitate an additional significant policy change considering that Russia’s attack on Ukraine in 2022 led the European Union to commit to ceasing all Russian energy imports by 2027.
Europe has limited options. Talks with LNG giant Qatar for more gas have stalled, and while the deployment of renewables has accelerated, the rate is not fast enough to allow the EU to feel secure.
“If there is a reasonable peace in Ukraine, we could go back to flows of 60 billion cubic metres, maybe 70, annually, including LNG,” Didier Holleaux, executive vice-president at France’s Engie, told WARINFOan interview.
The French government partially holds ownership of Engie, a company that was once one of Gazprom’s largest purchasers of natural gas. According to Holleaux, Russia has the potential to meet roughly 20-25% of the European Union’s requirements, compared to the approximately 40% it supplied prior to the conflict.
The head of French oil major TotalEnergies, Patrick Pouyanne, has warned Europe against over-relying on U.S. gas.
Pouyanne stated to WARINFO that they must diversify with multiple pathways instead of depending excessively on just one or two sources. Total exports a significant amount of US LNG and also deals in Russian LNG sourced from the independent company Novatek.
Pouyanne also stated that Europe won’t revert to importing 150 billion cubic meters from Russia as they did prior to the conflict, but he wouldn’t be surprised if it ends up being around 70bcm.
GERMAN PIVOT
France, being a major producer of nuclear power, already boasts one of the most varied energy portfolios across European nations.
Until the Ukraine conflict, Germany depended significantly on inexpensive Russian natural gas to support its industrial sector but now faces more limited alternatives.
At the Leuna Chemical Park, one of Germany’s largest hubs for chemicals where companies like Dow Chemical and Shell have facilities, several producers argue that Russian gas ought to be restored soon.
Russia used to cover 60% of local needs, mainly through the Nord Stream pipeline, which was blown up in 2022.
“We’re facing an urgent crisis and cannot afford to delay,” stated Christof Guenther, the managing director at InfraLeuna, which operates the facility.
He said the German chemical industry has cut jobs for five quarters in a row, something not seen for decades.
He stated that reopening pipelines would lower prices more effectively than any present subsidy programs.
“Discussing this is off-limits,” Guenther said, noting that numerous coworkers concurred about the necessity of returning to Russian natural gas.
Nearly one-third of German voters supported parties with pro-Russia stances in the Federal Election held in February.
In the German state of Mecklenburg-Vorpommern, which lies in the eastern part of Germany where the Nord Stream pipeline reaches land after traveling beneath the Baltic Sea from Russia, a survey conducted by the Forsa Institute revealed that 49% of Germans favor reinstating natural gas imports from Russia.
“We need Russian gas, we need cheap energy – no matter where it comes from,” said Klaus Paur, managing director of Leuna-Harze, a mid-sized petrochemical maker at the Leuna Park. “We need Nord Stream 2 because we have to keep energy costs in check.”
The industry wants the federal government to find cheap energy, said Daniel Keller, economy minister for the state of Brandenburg – home to the Schwedt refinery, co-owned by Russian oil firm Rosneft but held in German government trusteeship.
“We can imagine resuming the intake or transport of Russian oil after peace is established in Ukraine,” Keller said.
TRUMP FACTOR
U.S. gas covered 16.7% of EU imports last year – behind Norway with 33.6% and Russia with 18.8%.
Russia’s share will drop below 10% this year after Ukraine shut pipelines. The remaining flows are mainly LNG from Novatek.
The EU is preparing to buy more U.S. LNG as Trump wants Europe to lower its trade surplus with the United States.
“Absolutely, we will require additional LNG,” stated EU Trade Commissioner Maros Sefcovic last week.
Tatiana Mitrova, a research fellow at Columbia University’s Center on Global Energy Policy, stated that the tariff dispute has intensified Europe’s worry regarding their dependence on American natural gas.
“increasingly challenging to view US liquefied natural gas as an impartial product; eventually, it could transform into a geopolitical instrument,” Mitrova noted additionally.
Should the trade conflict intensify, there is a slight possibility that the United States might restrict LNG exports, according to Arne Lohmann Rasmussen, who serves as the chief analyst at Global Risk Management.
A high-ranking European Union official, who spoke on condition of anonymity, concurred, stating that nobody could dismiss the possibility “of this influence being utilized.”
If U.S. domestic natural gas prices increase due to higher industrial and artificial intelligence demands, the country might limit exports to all markets, according to Warren Patterson, who leads commodity strategies at ING.
In 2022, the European Union established an optional target to cease importing natural gas from Russia by 2027; however, they have postponed releasing their strategies for achieving this objective two times. When asked about these statements made by various firms, a representative of the EU Commission chose not to provide any commentary.
ARBITRATION
A number of companies within the European Union have initiated arbitration proceedings against Gazprom due to the company’s failure to deliver natural gas after the conflict involving Ukraine began.
Courts awarded Germany’s Uniper and Austria’s OMV 14 billion euros and 230 million euros respectively. Germany’s RWE has claimed 2 billion euros, while Engie and other firms have not disclosed their claim.
Engie’s Holleaux said Kyiv could allow Russia to send gas via Ukraine to meet arbitration repayments as a starting point of resuming contractual relationships with Gazprom.
“You (Gazprom) want to come back to the market? Very good, but we won’t sign a new contract if you don’t pay the award,” Holleaux said.
The resumption of Russian gas supplies concerns Maxim Timchenko, who heads DTEK, Ukraine’s private gas firm. The company aims to bring American liquefied natural gas into Ukrainian storage facilities for potential redistribution within Europe.
“As a Ukrainian, it’s difficult for me to comment, but I hope that European politicians have learned from their experiences with Russia,” Timchenko stated.
(Reporting by Marwa Rashad in London, Riham Alkousaa in Berlin, América Hernández in Paris, Nora Buli in Oslo, and Kate Abnett in Brussels; additional reporting by Anna Hirtenstein in London; written by Dmitry Zhdannikov; edited by Simon Webb and Barbara Lewis)
