Europe, Germany and the Continued Benefits of U.S. LNG Exports

Mark Green
Posted July 5, 2023

When President Biden and European Commission President Ursula von der Leyen agreed in March 2022 on a path for increased volumes of American liquefied natural gas (LNG) that would help Europe speed its turn away from piped Russian natural gas, not too many would have predicted what was ahead.

For starters, the U.S. helped stave off the worst-case scenario by surging LNG cargoes to the continent.  Europe was the leading destination for U.S. LNG in 2022, as American producers shipped 6.8 billion cubic feet per day (Bcf/d), an increase of 141% compared to 2021, according to the U.S. Energy Information Administration (EIA). For the first time, European LNG imports surpassed imports to the continent via pipelines.

This shift also was seen in the recent announcement that Germany’s Securing Energy for Europe (SEFE) will buy 2.25 million tonnes per annum – equal to 0.3 Bcf/d – of American LNG from Venture Global LNG over 20 years. Combined with an earlier Venture Global deal with German utility EnBW, the U.S. company is Germany’s largest LNG supplier.

Rob Jennings, API vice president of Natural Gas Markets:

“This is the latest in a series of agreements that underscore the seismic shift from Russian gas to American LNG. Europe’s energy crisis has cemented the U.S. as a reliable supplier of LNG to our allies, helping to secure their energy futures for decades to come.”

Not forgetting that U.S. LNG exports also generate benefits here at home (more below), a couple of big-picture observations:

American Energy Leadership Continues to Make a Difference

As Jennings noted, increased American LNG to Europe has been a game-changer for a continent that had grown too dependent on Russian natural gas and was being squeezed by the Russians after their invasion of Ukraine.

SEFE Chief Executive Egbert Laege told the Financial Times that the new deal with Venture Global marked “another important step on our mission to secure energy for European customers” and would “contribute to the further diversification and sustainability” of the continent’s supplies.

American energy can help advance U.S. foreign policy interests around the world. By supporting Europe’s well-being in the ongoing Russia-Ukraine crisis, American energy also is helping blunt aggression and, specifically, Russia’s attempt to weaponize its energy against others. This is what von der Leyen had in mind when she and President Biden announced their agreement last year:

“I want to tell the American people how grateful Europe is for their unwavering support. This support also extends to strengthening Europe’s energy security and independence from Russian fossil fuels. As you know, we aim to reduce this dependency on Russian fossil fuels and to get rid of it. … We want, as Europeans, to diversify away from Russia, towards suppliers that we trust, that are friends, and that are reliable.”

American Natural Gas Exports Generate Domestic Benefits

The U.S. is a natural gas production powerhouse. For example, the Permian Basin, one of the leading producing areas, set an annual record of 21.0 Bcf/d in 2022, federal data show. That’s 14% higher than the 2021 average, building on steady growth for more than a decade and extending into the first four months of this year, per EIA:

Three more natural gas facts:

• LNG exports drove growth in U.S. natural gas demand, increasing 43% from 2012 to 2022, EIA says.
• The U.S. is poised to set a new record for LNG export capacity, about to add 5.1 Bcf/d in the first half of 2023, beating the full-year record of volumes from 2014, Oil Price reports.
• U.S. natural gas and LNG exports are projected to grow through 2050, according to EIA’s Annual Energy Outlook.

So, what are the benefits here at home? Think American jobs and American economic growth wherever you see references to rising natural gas production, growing natural gas demand and increased export capacity. All of them signal new investment, new capital expenditures, new job creation and new boosts to local economies – as the natural gas and oil supply chain supports production and industry workers spend their income.

America can do both things at once – help allies abroad and continue to provide access for families and businesses to affordable, reliable energy. There’s a unique energy/economic dynamic at work: American LNG exports are made possible by strong American natural gas production which, in turn, generates the benefits described above.

America’s natural gas and oil strength should continue to be supported by smart, forward-thinking, bipartisan-inclined policies – including increased safe and responsible access to energy resources, offshore and onshore, as well as additional permitting reforms to allow construction of critical infrastructure.