Europe has a Russia-sized hole in its natural gas supply, and the US wants to help fill it. Today (March 25), US officials agreed to supply the EU with an additional 15 billion cubic meters of liquified natural gas by the end of 2022, to offset imports from Russia.
It’s a nice political gesture, as Europe scrambles for any way to stop paying Vladimir Putin’s government hundreds of millions of dollars per day for gas. But it only accounts for about 10% of Russian gas exports to Europe. And there’s one other little problem: The US is already exporting nearly every drop of LNG it can.
US LNG exports are maxed out
Global LNG demand was already surging prior to the Ukraine conflict as countries everywhere seek to lower than reliance on coal. US exporters have been racing to bring more shipping terminals online for the last few years, and in December 2021 finally surpassed Qatar and Australia as the world’s top LNG exporter.
In February, US LNG exports hit a record of 13.3 billion cubic feet per day, the first time that all seven US terminals were fully docked by tankers at once. Once the most recently completed new terminal, Calcasieu Pass in Louisiana, is fully operational by the end of this year, total US export capacity will be 13.9 bcf/d.
It takes years to build new LNG export infrastructure, so it’s not clear how the US can meet its near-term promise to Europe other than talking Asian customers like China and Japan into reselling some of their American LNG to Europe.
Longer-term, European buyers are already signing advance contracts for US LNG that won’t be delivered until 2025 or later. Europe will also need to expand its import terminal infrastructure.
No matter what happens in the coming weeks in the Ukraine conflict, Europe is preparing to make its shift away from Russian gas permanent.