The recent endeavor by the Republican-controlled House of Representatives in the U.S. to lift the halt on approvals of permits for new liquefied natural gas (LNG) projects appears unlikely to succeed.
Despite the House passing a bill to remove the pause on LNG permits, it still awaits approval in the Democratic-controlled Senate and the signature of President Biden to become law. LNG continues to hold significance as a vital emergency energy source in the evolving global oil market landscape.
The U.S. plays a pivotal role as a key producer and coordinator of LNG supplies, crucial for maintaining political cohesion in Europe and NATO’s security alliance.
In response to Russia’s actions, particularly its 2014 invasion of Ukraine and subsequent annexation of Crimea, NATO’s reaction was largely ineffectual. This was partly due to European countries, notably Germany, relying heavily on Russian gas for economic growth, hesitating to impose significant sanctions on Russia that could disrupt gas supplies.
However, the stance shifted when the U.S. ensured alternative gas supplies early on, prompting European countries to consider punitive measures against Russia. The U.S. strategy involved increasing its own LNG deliveries to Europe and pressuring other suppliers to do the same, with LNG emerging as a flexible alternative to pipelined gas.
Following the White House’s decision to pause approvals of new LNG projects, the European Commission asserted that this would not immediately impact the EU’s security of supply. However, concerns linger about potential delays or cancellations of these projects, which could undermine the U.S.’s commitment to the LNG sector and jeopardize cohesion in Europe’s approach to dealing with Russia.
Shell recently warned of a significant surge in global LNG demand by 2040, highlighting the potential impact of a long-term U.S. ban on new LNG export permits. Such a ban could disrupt the global LNG market, affecting North American exports and exacerbating the global gas supply imbalance.
Eurogas President Didier Holleaux emphasized the importance of additional U.S. LNG export projects to prevent prolonged supply imbalances. European Commission Executive Vice President Maros Sefcovic characterized the U.S. as the “global guarantor of energy security,” underscoring its crucial role in maintaining stability in the energy market.
