The European Union has rid itself of its dependency on Russia for gas. The rapid expansion of a liquid gas infrastructure is now creating new dependencies and forcing states to use the fossil fuel LNG for years.
Dependence on Russian gas has plunged Europe, and Germany in particular, into an energy crisis following the Russian attack on Ukraine. The EU previously imported almost half of the gas it needs from Russia. The European states have broken free from these chains, albeit at a high price. Industry and consumers pay for the new independence. While many are still digesting the new reality, European governments paved the way for a new long-term gas dependency years ago. The start of the war on February 24, 2022 accelerated this process even further.
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What is banned in many EU countries due to environmental concerns is being practiced in the United States on an unprecedented scale: fracking. The process, in which a fluid is pressed into the rock through wells with high hydraulic pressure, which creates or widens cracks, produces otherwise unattainable natural gas reserves. And the USA is constantly expanding its production capacities. Demand, especially from Europe, has not only fueled the fracking boom overseas since the beginning of the war. In a global comparison, the USA already has the most fracking facilities. In order for Germany and the EU to receive urgently needed natural gas, they make themselves dependent on a production technology that is banned in this country.
An analysis by Investigate Europe reveals the extent of Europe’s new liquefied natural gas dependency on the US. According to this, European companies have signed at least 33 contracts for US LNG in the past ten years, ten of them in 2022 alone. Most agreements have a contract term of 20 years. Overall, EU LNG imports rose by around 150 percent last year.
The EU has turned its back on Russia on gas issues. But dependence on the USA also has pitfalls. At least since the presidency of Donald Trump, the country has been considered fickle. The role of the reliable partner for Europe has suffered serious damage. In general, the nation is deeply divided internally. Whether it’s abortion rights, gun violence, immigration or the loss of purchasing power – the poles are drifting ever further apart on many issues.
The next presidential election in 2024 could once again put international partnerships to the test. If Donald Trump comes to power again, which currently seems unlikely, or a similarly knit Republican, the consequences for cooperation between the US and the EU are uncertain.
In addition, the price of natural gas in the USA more than doubled at the beginning of last year. Electricity prices exploded; The result was layoffs and cutbacks in production. The US is also experiencing an energy crisis. If they eventually hold their own gas on a large scale, a heavily US-dependent Europe faces a new old problem.
A diversification of the LNG partnerships can compensate for the loss of larger exporting countries. In 2021, around 28 percent of the LNG for the EU came from the USA. 20 percent each came from Russia and Qatar. Three states together supplied around 70 percent.
For Germany, for example, Qatar is planning to expand liquefied natural gas deliveries from 2026. The Federal Republic can thus cover around three percent of its needs. Other important German partners are Nigeria and Algeria. Uniper and RWE, the operators of the first floating terminals, have also concluded contracts with suppliers in Australia, the United Arab Emirates, Oman and Canada, among others, in addition to the USA.
The long contract periods – often conditions for reaching an agreement at all – not only create a dependency on large suppliers like the USA. From the point of view of environmentalists, they are also the basis for missing the climate targets. Shortly after the war began, US President Joe Biden and EU Commission President Ursula von der Leyen announced an agreement intended to reduce the European Union’s dependence on Russian energy.
The criticism even then: “This agreement puts the EU and the USA on the wrong and dangerous path because it promotes new infrastructure for the import of fossil gas to Europe,” warned Murray Worthy, head of the gas campaign at the environmental organization Global Witness in the “German Wave”.
The construction of new LNG terminals will tie down fossil gas imports for years to come. And that, according to the environmentalist, well beyond the time when the phase-out of the climate-damaging fuel is planned.
In Germany, one is prepared for this case, argued recently Federal Minister of Economics Robert Habeck (Die Grünen). LNG terminals should be sustainable. The plan: In order to achieve the climate goals, they should later be able to absorb climate-friendly green hydrogen or ammonia. However, initial studies are already doubting that Habeck’s ambitious terminal plan could work.
In order to be able to absorb the large quantities of liquid gas from the USA and distribute them within the EU, the Europeans had to spend a lot of money. Only in December did the EU decide to finance gas projects with EUR 67.5 billion of the EUR 225 billion in low-interest loans from the reconstruction fund.
Numerous new infrastructure projects emerged. Germany pounded LNG terminals out of the ground at the new “Germany pace”, as Chancellor Olaf Scholz (SPD) announced at the end of December. In many places in the EU, in addition to the terminals already in operation, landing stations have been revived, newly built or are currently being built. According to the “Investigate Europe” analysis, 34 LNG terminals and seven pipelines are currently under construction or being expanded. The Federal Ministry of Economics alone is therefore counting on costs for the new landing points of 9.7 billion euros.
The process began long before the war in Ukraine; but this fueled him again. After Russia’s attack, when the EU-US Energy Security Task Force decided “additional liquefied natural gas (LNG) volumes for the EU market of at least 15 billion cubic meters in 2022 and further increases in the future,” the impetus was revealed Process particularly evident in Germany.
By the end of 2023, seven new LNG terminals with an annual capacity of more than 30 billion cubic meters are planned and should be connected to the gas grid. The LNG terminal in Wilhelmshaven has already been approached from the USA. The tanker “Maria Energy” came across the ocean with a ton of liquid gas in its belly to fill our storage tanks. Many more ships will follow in the coming weeks. And a few days ago, another floating terminal for liquefied natural gas arrived in Brunsbüttel, where the third floating LNG terminal in Germany is currently being built.
How important is Russian gas for Germany’s energy supply? How big is the dependency on Russian imports really? Answers to the most pressing questions at a glance.