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European Union companies find themselves in a precarious position as Donald Trump threatens trade tariffs unless the bloc increases its purchases of American oil and gas. Despite Brussels expressing willingness to engage, the reality of implementing such demands presents significant obstacles.
The EU’s structural limitations have become apparent, as the European Commission lacks direct purchasing power for gas transactions. Commission President Ursula von der Leyen’s supportive rhetoric towards American LNG fails to address the fundamental issue: private companies, not governmental bodies, make purchasing decisions based on market dynamics.
The situation is further complicated by the EU’s continued reliance on Russian liquefied natural gas (LNG). European companies imported record volumes in the past year, attracted by competitive pricing. This dependency persists despite the bloc’s stated objective to eliminate Russian fossil fuel imports by 2027.
Price sensitivity remains a crucial factor in the European market. EU gas prices currently stand at approximately triple US levels, maintaining more than double their pre-Ukraine invasion rates. This price differential poses significant challenges for European industries, particularly in Germany, the region’s largest economy.
The US energy sector maintains it possesses sufficient capacity to replace Russian LNG in Europe. S&P Global Commodity Insights reports that 10.3 million tonnes of LNG are already contracted for European delivery from facilities under construction, with an additional 9.5 million tonnes available for potential buyers.
Market forecasts indicate EU natural gas demand could decrease by up to 25 per cent by 2030 compared to 2023 levels. The emergence of new global suppliers, including Qatar and Canada, suggests Europe’s options for diversifying away from Russian LNG will expand, particularly from 2026 onwards.
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