The United States is in discussions with Qatar and other big gas exporters to plan contingency measures in case a Russian invasion of Ukraine disrupts supplies to Europe.
Talks with Qatar and EU member states, which focus on securing additional seaborne LNG cargoes, have become increasingly urgent after little progress was made this week in high-level security talks between Washington and Moscow.
This raises concerns conflict That could affect gas supplies at a time when Europe is already facing record prices. However, officials have warned that there is no “magic wand” to address potential shortages with the continent already mired in an energy crisis.
“We’re looking at what can be done to prepare for the event, especially during very cold winter months [European natural gas] supplies in stockpiles,” a senior U.S. government official said.
“We discussed what could be on the market and what could help. . . we can now prepare for deployment if the crisis escalates”.
Tensions between the West and Russia have risen as Moscow has deployed some 100,000 troops along the Ukrainian border. The U.S. has threatened tough sanctions on Russia if it invades, while some energy officials have accused the Kremlin of already exploiting its natural gas exports.
Fatih Birol, head of the International Energy Agency, said last week, Russia is curbing gas supplies to Europe Amid “increasing geopolitical tensions”.
There are fears the conflict could lead to a further drop in gas supplies in Europe, which is facing a deepening cost of living crisis and rising inflation as gas prices soar. With natural gas inventories at an all-time low throughout the year, officials are concerned that Europe could face industrial disruptions, rolling blackouts and even interruptions to heating supplies if exports plummet after the Russian invasion.
Senior officials in the Joe Biden administration have acknowledged that existing contracts between LNG exporters and Asian buyers could complicate efforts to shift supply to Europe.
“No wand,” the official said. “It’s all really hard, really complicated. Hopefully it’s done within the framework of how the market works, how the commercial terms work, how the goods work.”
The official added that it has become increasingly clear that Russia has been squeezing gas supplies in recent months in order to gain leverage over European capitals.
“This is not the market situation we are dealing with. These are not market forces. These are rigged markets,” the official said.
Europe’s reliance on Russian gas complicates efforts to build a united front against threats from Moscow.
While most observers expect Russia to refrain from cutting exports outright, there are concerns that Moscow could squeeze further supplies or that Ukraine’s gas export infrastructure could be damaged by the conflict.
Energy executives also warned about the potential impact of U.S. sanctions after Biden said this week that punitive measures could include blocking transactions by Russian banks. Dollar – The main currency for global commodity trade.
If disruptions occur, coordinated government action to procure seaborne LNG cargoes may be required, and Europe will almost certainly face sky-high prices, an energy industry executive said.
“They’re going to actually have to fight for all the supply in the market, to get the goods out of Asia, and the likely end result is that the taxpayer will pay,” the energy executive said.
“It’s like procuring personal protective equipment at the start of a pandemic, and the government needs to intervene.”