Just Like That, Gas is King Again – U.S. in Talks with Energy Producers to Supply Europe if Russia Invades Ukraine

WASHINGTON, Jan 25 (Reuters) – The United States is in talks with major energy-producing countries and companies around the world over a potential diversion of supplies to Europe if Russia invades Ukraine, senior Biden administration officials said on Tuesday.

Speaking to reporters on a call, the officials did not name the specific countries or companies they were in talks with to ensure an uninterrupted energy flow into Europe for the remainder of the winter, but said they included a broad range of suppliers, including sellers of liquefied natural gas (LNG).

Reuters reported earlier this month that State Department officials were discussing contingency plans with energy companies to ensure stable supplies to Europe if conflict between Russia and Ukraine disrupted Russian supplies.

“We’ve been working to identify additional volumes of non- Russian natural gas from various areas of the world; from North Africa and the Middle East to Asia and the United States,” a senior administration official said on condition of anonymity.

“Correspondingly, we’re … in discussions with major natural gas producers around the globe to understand their capacity and willingness to temporarily surge natural gas output and to allocate these volumes to European buyers,” the official said.

The White House’s plan is complicated by the fact that the world’s LNG producers are already churning out as much as they possibly can. Reuters reported that the companies contacted told the U.S. government officials that global gas supplies are tight and that there is little available to substitute large volumes from Russia.

Russia has massed an estimated 100,000 troops within reach of Ukraine’s border, surrounding it from the north, east and south, raising alarm in the West that Moscow is preparing for a new military assault after its invasion of Crimea in 2014.

The Russian government denies that it plans an invasion and Moscow has cited the Western response as evidence that Russia is the target, not the instigator, of aggression.

ENERGY CRISIS

The European Union depends on Russia for around a third of its gas supplies. Any interruptions to Russia’s gas supply to Europe would exacerbate an existing energy crisis caused by a shortage.

Record power prices have driven up consumer energy bills as well as business costs and sparked protests in some countries.

Russia normally supplies 40 billion cubic meters (bcm) of gas per year to Europe through Ukraine, the senior administration official said, adding that it has already cut those supplies through this route by half.

“To ensure Europe is able to make it through the winter and spring, we expect to be prepared to ensure alternative supplies covering a significant majority of the potential shortfall,” the official said.

The key to ensuring supplies was also about identifying the locations where the shortfall would be, the official said. “The story of Europe is making sure that you have the access to the right locations in Europe that would be most affected by Russian cut-off of supplies and where storage is lower than other places in Europe.”