US President Donald Trump's enthusiasm over "massive" impending purchases of US liquefied natural gas (LNG) may be thwarted by a stark market reality.
On June 25, Trump held a meeting with European Commission President Jean-Claude Juncker in Washington. It appears that the two politicians managed to reach a compromise over the trade spat between the US and the EU.
"The United States and the European Union have a $1 trillion bilateral trade relationship — the largest economic relationship anywhere in the world," the US president said during a joint press conference. "We want to further strengthen this trade relationship to the benefit of all American and European citizens. This is why we agreed today, first of all, to work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods."
Besides, Trump emphasized that the EU agreed to buy more American LNG: "They're going to be a massive buyer of LNG, so they'll be able to diversify their energy supply. And we have plenty of it."
Washington has long pushed ahead with its incentive to flood Europe with its LNG. It appears that Trump's "mission is accomplished." However, it is not as easy as it seems.
In Europe, US LNG is facing strong competition from Russian pipeline gas that is about $2.5-3.5 (per million British thermal units) cheaper that the US super-chilled fuel, according to Bloomberg.
Russia is not Washington's only competitor on the Old Continent: Norway is feeding Europe with its pipeline gas, while Qatar, Nigeria and Algeria are shipping liquefied hydrocarbons to the EU as well.
However, the "supplies that arrive by pipeline from Russia and Norway are more competitively priced — and more abundant," the media outlet emphasizes.
While Gazprom pumped a total of 194.4 billion cubic meters of gas to its European customers in 2017, the US shipped just 2.26 billion cubic meters of LNG to Europe (Italy, Lithuania, Malta, Netherlands, Poland, Portugal, Spain, and the UK) over the same period.
There is yet another reason why Trump's statement should be taken with a grain of salt: It's up to European nation-states to decide where they will buy hydrocarbons, no matter what Juncker promised Washington.
Thus, Germany is taking every effort to implement the Russian-European Nord Stream 2 project, regardless of the vocal displeasure emanating from Washington and Brussels. The endeavor is also supported by Europe's major energy corporations, namely Austria's OMV, France's ENGIE, Germany's Uniper and Wintershall, and Anglo-Dutch Royal Dutch Shell.
Furthermore, on July 18, US lawmakers introduced the Energy Security Cooperation with Allied Partners in Europe Act (ESCAPE), which could subject Russian energy projects, including Nord Stream 2, to further sanctions.
Meanwhile, the latest poll in Germany conducted by Forsa for N-TV and RTL indicated that 66 percent of the country's civilians approve Nord Stream 2, as it would "ensure an unfettered supply of natural gas to Germany."
No matter how hard the US tries to palm its LNG off to European customers, it's the market, not politicians, that decides what provider will come out on top.