In January, the administration of President Joe Biden announced a moratorium on the construction of new terminals for the export of liquefied natural gas (LNG) from the US, and the Federal Republic is reacting with concern, writes the economic daily Handelsblatt. German politicians therefore demand quick steps, namely the approval of mining in the North Sea and the expansion of gas production in Lower Saxony. However, the Reuters report claims that this is pressure from lobby groups and that there will be plenty of gas in Europe anyway.
According to the Handelsblatt daily, debates about gas extraction are taking place across political parties. Michael Kruse, energy policy spokesman for the FDP parliamentary group, told Handelsblatt that Germany must now do its homework. “This includes the rapid approval of clean and safe gas production in the German North Sea,” he said.
In an interview with Handelsblatt, Wolfgang Steiger, general secretary of the CDU Economic Council, called on the federal government to give up its opposition to the expansion of gas production in Lower Saxony. “The US government’s decision to oppose further LNG gas exports to Europe causes uncertainty in the markets and will tend to cause energy prices to rise. The federal government must therefore act quickly,” said Steiger.
According to Ludwig Möhring, executive director of the Federal Association of Natural Gas, Oil and Geoenergy, the German government should focus more intensively on the potential of domestic production and strategically integrate it into the economy. There is a need to optimize domestic resources. “This is all the more true as LNG imports have up to 30 percent worse CO2 footprint than domestic European or German production,” argues Möhring.
Germany recently signed a ten-year deal to import natural gas from Norway, which should cover a significant portion of Germany’s consumption.
In connection with President Biden’s move, Reuters says EU energy officials and analysts are dismissing warnings from German industry and lobby groups. According to them, Europe will have sufficient gas reserves in the next 10 years despite the US administration’s move to suspend the approval of new liquefied natural gas terminals.
The US became the largest exporter of LNG to Europe after the Russian invasion of Ukraine, the explosion of the Nord Stream gas pipeline and the reduction of Russian supplies to Europe. More than 60% of US LNG exports went to Europe in the past two years.
A spokesman for the European Commission told Reuters that the US decision “will not have any short- to medium-term effects” on the security of gas supplies to the EU. Europe survived two winters without the Russian pipeline, helped by lower heating demand due to mild weather. However, high energy prices have forced some industries to close their operations.
Despite the suspension of new projects, the US is ready to expand its LNG capacity. “There are a number of US projects that are already under construction or that have already been approved,” said Jacob Mandel of energy consultancy Aurora Energy Research. U.S. LNG capacity will nearly double by the end of 2028 if all already approved projects are commissioned. However, the Americans do not fulfill a number of agreements on the supply of LNG to Europe and prefer to direct the gas to where the current demand is cheaper. The EU is therefore currently conducting several arbitration proceedings with them.