President Joe Biden of the United States has agreed to export liquefied natural gas (LNG) to the European Union to meet the continent’s energy demands. In the aftermath of the Russia-Ukraine conflict, European countries are attempting to wean themselves from Russian energy supplies.
Until 2030, the United States will provide the EU with at least 50 billion cubic meters of LNG. This is done to diminish Europe’s reliance on Russian energy exports and therefore neutralize the Kremlin’s influence on Europe to a significant extent.
Around 40% of Europe’s natural gas requirements are met through Russian shipments. Germany and many Eastern European countries rely on Russia for more than 80% of their natural gas needs.
Under the threat of an oncoming energy crisis, the EU has backed down on its climate change ambitions. For example, the EU recently classified nuclear and natural gas to be “green” energy sources.
What exactly is it?
The US will provide 15 billion cubic meters (bcm) of LNG to the EU this year under the terms of the agreement. It should be highlighted that Europe is reliant on Russian energy exports, which has limited its response to Russia’s invasion of Ukraine owing to fears that Russia may shut off the energy supply to Europe. Even before the Russian invasion, gas prices in Europe skyrocketed, and disruption in Russian supplies might exacerbate the problem. As a result, the EU has become extremely vulnerable, to the point that the West has decided not to put sanctions on the EU’s Russian energy supplies.
About 40% of Europe’s natural gas requirements and a quarter of its crude oil requirements are met by Russian shipments. Germany and many Eastern European countries rely on Russia for more than 80% of their natural gas needs. Because Russian gas supplies to Europe run through Ukraine, energy supplies to Europe have been disrupted. The Nord Stream 2 pipeline project was devised by the EU to assure direct gas supplies from Russia, bypassing Ukraine. Although this project has been halted indefinitely since Russia invaded Ukraine, many analysts believe it will continue to place Europe at the mercy of the Kremlin‘s geopolitical aims. As a result, the EU came up with a strategy earlier this month to reduce emissions.
Is it possible for Europe to wean itself off of Russia’s energy supply?
The LNG arrangement with the United States is unlikely to quickly diminish Europe’s strong reliance on Russian energy. Last year, Russia supplied over 150 billion cubic meters of gas to the EU, whereas the US will only supply 15 billion cubic meters of gas to Europe this year. Furthermore, new supplies may cut European gas prices from their current high levels.
When it comes to LNG, there are also logistics and production factors to consider, making it a more expensive fuel than natural gas transported through pipelines. This is why Europe has always relied on relatively inexpensive Russian gas imports. The LNG contract between the US and the EU, on the other hand, might represent the start of the EU’s efforts to diversify its energy sources and reduce its dependency on Russia. Even this year, LNG imported from non-Russian sources is likely to cover more than a third of Europe’s gas needs.
The EU’s natural gas production has decreased by nearly two-thirds in the last two decades, while its gas imports from Russia have soared. In reality, once Russia shut off shipments through Ukraine, Europe’s dependency on Russian gas grew much more.
Last month, the EU deemed nuclear power and natural gas to be “green” energy sources. Analysts perceive this as a compromise on the EU’s climate change aims. It’s worth noting that the EU’s attempt to phase out fossil fuels as part of its climate change agenda was seen by several analysts as a major factor in last year’s spike in energy prices.
Published By: JAINAM SHETH
Edited By : KRITIKA KASHYAP
