The US will emerge as the world’s top exporter of liquified natural gas as the West scrambles to slash Russian shipments and find other alternatives, according to energy expert Dan Yergin.
As a result of Russia’s invasion of Ukraine, the European Union is looking to cut its dependency on imports of the country’s gas by two-thirds and end fossil-fuel imports by 2027.
The US on Friday pledged to help boost LNG supplies from alternative sources to European nations by the end of 2022. The aim is for the EU to wean itself off imports from Russia, which currently account for 40% of its gas needs.
“The US is going to emerge this year as the world’s largest LNG exporter, and it is clear that US LNG is a geopolitical asset for the United States and for Europe,” Yergin told CNBC’s “Street Signs Asia” on Monday.
President Joe Biden has acknowledged that wiping out Russian gas would be costly for Europe, but said it is the “right thing to do from a moral standpoint.”
Yergin — who’s written a book called “The New Map: Energy, Climate, and the Clash of Nations” — described Biden’s pledge as an administrative turnaround that would elevate the US’ status in the energy market.
“The US was providing more gas to Europe during about half of January than Russian pipeline gas,” the S&P Global vice president said. “They’re talking about an increase … more US productions coming on.”
Under the agreement, Europe will get at least 15 billion cubic meters of additional LNG supplies by the end of the year. It isn’t yet clear where they would come from.
Yergin noted that at the CeraWeek conference in Houston earlier this month, EU representatives were asking around for leads on sources of extra LNG supplies.
Prices for key commodities — and for the gas, food, and cars where they underpin — have risen in the wake of Russia’s invasion, and after the US and its allies imposed sweeping sanctions on the country.
Data from the US Energy Information Administration shows gas prices reached record highs in March, hitting $4.34 per gallon.
“Obviously none of these economies want to see prices shooting up further, but the longer the war goes on, the more Russia has been separated from the global economy,” Yergin said.
At the same time, buyers and others in the energy market are steering clear of Russian energy, the energy market historian noted.
“First of all, there’s a lot of self-sanctioning that’s going on … People not picking up oil, banks not providing letters of credit, shippers not showing up,” Yergin said.
“And indeed, people in some ports not receiving Russian oil. So I think there is kind of a tendency to start to move towards more formal bans on Russian oil.”
He expects natural gas prices to remain elevated along with a shift in distributions.
“One thing we’re going to see is a question of how much gas that’s now aimed for Asia will shift to Europe because of higher prices as well as strategic considerations,” he said.
Yergin believes Russia will continue to be an important player in the market, but will be a reduced energy power compared to the last few decades.
“It’ll be very helpful this year if it’s a mild winter in Asia and in Europe to manage through this, but Europe has basically said we’re through with Russian energy over the next couple of years,” he said.
https://finance.yahoo.com/news/us-emerge-worlds-largest-natural-115918077.html