The mysterious EU Russian gas plan, and what it means for US LNG exports.

Hello and welcome to Energy Source, which comes to you from New York and Brussels.

Oil prices were established in a maximum of two weeks on Monday, in the midst of hope that a large -scale commercial war between China and the United States can be avoided after an agreement between the two nations to reduce tariffs, at least temporarily.

The increase in optimism among investors on the possible demand between the two largest economies in the world also increased the value of global values ​​markets and the US dollar.

Staying with China, my FT colleagues published a great reading on how President Xi Jinping has caused an electricity revolution that is addressing a crucial vulnerability in the Asian nation: the dependence of foreign energy.

China is on its way to becoming the first “electrostate” of the world, with a growing part of its energy from electricity and an economy increasingly driven by clean technologies, they write. It offers Beijing a strategic shock absorber of commercial decoupling and the increase in geopolitical tensions with the United States.

The country not only advances quickly towards self -sufficiency in the energy of safe national sources, but also exerts great power over markets for the resources and materials that support the technologies of the future.

For our main article today, Alice Hancock decodes what the new Russian Gas Plan in Brussels could mean for US LNG exporters.

Thanks for reading, Jamie

What the mysterious EU Russian Gas Plan means for US exporters

The future could be one of the two forms for liquefied natural gas exporters.

If an EU proposal to eliminate all Russian gas imports by 2027 goes as planned, final investment decisions about 45.5mn metric tons per year of the US LNG capacity could be taken this year and then, according to the global S&P figures published last Thursday.

But if it does not, there was even a “modest” return of Russian pipe gas to Europe, together with the imports of the Russian gas installation in the LNG 2 Arctic, which has been subject to US sanctions, S&P warns that $ 120 billion of investments in the United States industry would be at risk.

The United States represents approximately a fifth of EU’s LNG imports. Ryan Peay, an official of the United States Energy Department, said Washington this week expected US LNG exports.

“The future of Russian gas supplies remains the key uncertainty for the opening of the US market,” S&P said.

The critical problem for the US LNG industry is whether the EU plan will really work.

The bones of what the European Commission is marking its “roadmap” for phase to Russian fossil fuels outside the EU system by 2027, published last week, are: enforce a greater disclosure of information on contracts with Russian suppliers; require that all EU member states present plans on how they will eliminate Russian gas and oil; and prohibitions of SPOT contracts for the end of this year and long -term contracts for 2027.

The problem with the long -awaited plan is that nobody outside the commission is sure that it will allow companies to break the contracts with Russian suppliers without having to pay great compensation. Industry executives and ministries are concerned about legal risk.

“The legally solid form such as the rock to prohibit the remaining energy imports of Russia would be sanctions, but that route is prohibited because it requires unanimous approval by all the EU governments,” said Elisabetta Corago, a senior researcher of the European Reform Center, said Energy Source, noting that the Hungary and Slovakia Pro-Ruses sanctions

The commission has suggested that it has found a solution that would only involve a weighted majority of the Member States to agree and has promised to present the proposal in June.

In March 2022, EU countries pledged to eliminate Russian coal, oil and gas imports “as soon as possible”, after the large -scale invasion of Moscow in Ukraine in February 2022. Since then, according to an EU official, “we have not done much more than work on legal possibilities to limit imports in Russia.” Economic risks for market participants and suppliers. ”

“We know a lot what we have in mind,” added the official, declining to give more details.

Member States are baffled.

“We have been investigating it for more than two years and we have not really found something that can work more than sanction or a form of sanctions,” said a European official.

One way could be to argue that since the beginning of the war, the regulatory framework in the EU has made it difficult to continue the contractual obligations according to the business as usual, so this would justify an interruption of the contracts of “Force majeure,” said Corago.

But, he added: “This strategy is not exempt from risks, since companies that leave the contracts would be involved in expensive arbitration.”

EU diplomats have suggested that the idea of ​​enforcing more transparency in the market will help track the molecules and exert pressure on buyers. But it will not be equivalent to a legal basis for a prohibition.

Companies, as Sefe, the German energy company that imports Russian LNG, have said they were analyzing the commission document. The markets barely responded to their announcement that it has had a large extent in a complete elimination of Russian gas. The prices moved very slightly higher last Tuesday after the announcement at € 36.05 per megavatio hour, but they have returned to less than € 35/MWh.

The EU plan was announced since the discussions are executed simultaneously on how Brussels could assure the United States that EU companies will buy more LNG from the entire Atlantic as part of an effort to reduce the commercial deficit of the block and placate President Donald Trump.

Several ideas have been suggested, including the use of the EU joint gases purchase program to collect the demand and present it to the White House as an indication of how much gas the block could buy.

Marco Alverà, executive and co -founder director of Tree Energy Solutions, which operates one of the largest LNG terminals in Europe, has been pressing several EU commissioners so that the block has a “strategic gas reserve” that could “subscribe additional long -term LNG purchases and help trade discussions.”

Chris Treanor, Executive Director of Page, a coalition of EE. UU.

Dan Jørgensen, EU energy commissioner, told Energy Source that it was “too early” to speculate on how the commission would present its interest.

An EU diplomat observed that the metric tons of 45.5mn per year of the US capacity that S&P projected could enter online could become a victim of their own success: “There are many questions about all new LNG projects or liquefaction facilities in the United States, because somehow there are too many the investment case is also lower. [more of them] Lower prices. ” (Alice hancock)

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Energy Source is written and edited by Jamie Smyth, Martha Muir, Alexandra White, Tom Wilson and Malcolm Moore, with the support of the Global FT reporters team. Communicate with us in energy.source@ft.com and follow us in x in @Fotegy. Put up up to date with the past editions of the newsletter here.