The United States is in talks with Qatar and other major gas exporters to plan contingency measures in case a Russian invasion of Ukraine disrupts supplies to Europe.
Talks with Qatar and EU member states, focused on securing additional shipments of liquefied natural gas by sea, have taken on urgency after high-level security talks between Washington and Moscow this week broke down. resulted in only minimal progress.
This has heightened fears of a conflict that could affect gas supplies at a time when Europe is already facing record high prices. However, officials warned there was no “magic wand” to solve the potential revenue shortfall with the continent already in the grip of an energy crisis.
“We are looking at what can be done in preparation for an event, especially in the middle of winter with very low [European natural gas] supplies in stock,” a senior US administration official said.
“We discussed what can be moved in the market, what can help. . . the things we can prepare now for deployment if and when the crisis escalates”.
Tensions between the West and Russia have skyrocketed as Moscow deployed around 100,000 troops to the Ukrainian border. The United States has threatened tough sanctions against Russia if it invades, while some energy officials have accused the Kremlin of already cashing in on its gas exports.
Fatih Birol, director of the International Energy Agency, said last week that Russia was limiting gas supplies to Europe at a time of “heightened geopolitical tensions”.
There are fears a conflict could lead to another drop in gas supplies to Europe, which is facing a growing cost of living crisis and rising inflation as gas prices soar . With gas inventories at record highs for the time of year, officials fear Europe could face industrial disruption, blackouts or even a loss of heating supply if exports Russians fall sharply following an invasion.
Senior administration official Joe Biden acknowledged that existing contracts between LNG exporters and Asian buyers could complicate efforts to divert supplies to Europe.
“There is no magic wand,” the official said. “Everything is really hard, really complicated. We seek to do this within the framework of the operation of markets, the operation of trading conditions, the operation of cargoes. »
The official added that it had become increasingly clear that Russia had cut gas supplies in recent months in order to leverage European capitals.
“It’s not a market situation that we face. It’s not market forces. These are manipulated markets,” the official said.
Europe’s dependence on Russian gas has complicated efforts to present a united front against threats from Moscow.
While most observers expect Russia to avoid cutting exports altogether, Moscow still fears further cuts in supplies or that Ukraine’s gas export infrastructure will be damaged by the conflict.
Energy executives have also warned of the potential effect of US sanctions after Biden said this week that punitive measures could include preventing Russian banks from trading in US dollars – the main currency for global commodities trade. raw.
An energy executive said Europe would almost certainly face extremely high prices in the event of a disruption that could require coordinated government action to source LNG shipments by sea.
“They will effectively have to compete for all market supply, pushing cargo away from Asia, and the likely end result is that the taxpayer will pay,” the energy official said.
“It would be like buying PPE at the start of the pandemic, with governments having to step in.”
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