The European Union go to USA as a competitor in attracting investment, mainly due to its ambitious Inflation Reduction Act (IRA). On the other hand, Brussels also has another ‘rival’ that is climate change, promulgating the most ambitious policies in terms of decarbonization. Although Spain and its European partners have recognized this week that, in the short term, they need more ships sent by Joe Biden loaded with gas to continue ‘detoxing’ from Russia.
the commissioners Josep Borrell and Kadri Simson They shared a table with the US Secretary of State, Anthony Blinkenand the US Deputy Secretary of Energy, david turk, to talk about their energy relationship. Both parties insisted on the themes they have repeated since 2021: ensure energy security while accelerating the green transition and intensify their cooperation to reduce dependence on Russia.
In other words, Europe needs its gas in 2023 to definitively disconnect from Putin and the United States wants to continue being the trusted supplier of the Old Continent. European countries seek to fill their storage for next winter with as little Russian gas as possiblebecause there is no embargo on gas unlike oil, and this year a rival appears that had been ‘asleep’ in the crisis: China.
The return to activity of the Chinese economy requires a lot of gas and Europe does not want it to affect it. Biden also doesn’t want to lose his best client. Europe has been the main destination for US liquefied natural gas (LNG) in 2022, representing 64% of total exports. France, the United Kingdom, Spain and the Netherlands have absorbed 74% of everything that has arrived in Europe.
In particular, The United States consolidated itself as the main supplier of natural gas to Spain in 2022, with 28.9% of the total imports of natural gas, due to the lack of Russian gas and the Algerian supply cut. About 129.00 gigawatt hours (GWh), according to data from the Corporación de Reservas Estratégicas de Productos Petrolíferos (CORES), have arrived in Spain from the United States.
The main supplier in a highly diversified supply system. Spain has bought this hydrocarbon from 19 different countries, thanks to its six regasification plants that have made it a strategic entry point for liquefied natural gas (LNG) in Europe during this energy crisis. An infrastructure that has allowed it to compensate for the fact that Algerian gas no longer arrives through one of the two gas pipelines and, as has happened to Europe, it mostly compensates with more US supply.
The gas crisis has not passed
This relationship means that, on both sides of the Atlantic, the need to maintain the commercial relationship in energy matters is recognized, without jeopardizing the safe and regular supply that has been experienced in the past year. The gas supply crisis after the invasion has eased in recent months, but experts in the field continue to warn that the risk has not disappeared.
The main factor is that the world market for liquefied natural gas, which is sent by ships, does not have the necessary flexibility to provide stability.. An increase in demand due to the appearance of a new consumer such as China or a general increase in demand due to the weather can cause supply stress with maximum prices, such as €300/MWh which took place in the summer of 2022.
Europe has increased its regasification capacity in the EU, which until last year was concentrated in southern countries. The United States is seen in the sector as a temporary solution, but not the only way to balance the market. The market continues to believe that in order to provide stability, in the medium and long term, investments in energy infrastructures must be stimulated to provide a predictable perspective on the 2030 and 2050 horizon.
An argument that would attract European buyers and financial institutions to develop the necessary infrastructure. Because, as the experts point out, if the United States becomes dependent on Russia, energy independence will not be achieved in the medium term.
