Liam Halligan: Can Western Europe really go without Russian gas?
The US and EU have announced a major deal to export natural gas across the Atlantic
We don’t need Russian gas.
That’s the message as the US and the European Union announce a major deal to export liquified natural gas across the Atlantic, trying to limit Europe's reliance on Russian energy.
The US is set to provide the EU with 15 billion additional cubic metres of the fuel - known as LNG - by the end of the year.
LNG technology allows gas to be transported in vast volumes in specially-built ships which keep the gas in liquified form at sub-zero temperatures. This allows inter-continental gas transport across oceans, without relying on traditional pipelines.
Joe Biden accuses Vladimir Putin of using Russia's energy to coerce its neighbours – using profits from selling energy abroad to drive his war machine, the US President says.
Russia controls around 25% of the world’s known gas reserves.
Around 40% of all the gas used in Western Europe comes from Russia.
UK wholesale gas prices have spiked six-fold since Russia invaded Ukraine in February even though Britain depends less on Russian gas than the rest of Western Europe.
If this US gas deal does deliver 15 billion cubic metres of gas by the end of this year, is that a lot?
Well, the US sold 22 billion cubic metres of LNG gas to Europe last year – so 15 billion on top of that is significant.
But Western Europe uses almost 600 billion cubic metres of gas each year. So this US deal – despite all the fanfare – amounts to just one 40th of our annual gas use. Not very much.
In the here and now, household utility bills are set to go up by £700 a year on average from April – with more rises to come this autumn, as wholesale energy prices spiral and with oil prices up 10pc over the last week, Sunak’s Spring Statement 5pc cut in petrol and diesel duty has barely registered. For motorists across much of the country, the cost of filling up has continued to rise.
This US-EU gas deal is good news for America’s LNG gas industry, of course. But it’s unlikely to lower Western Europe’s reliance on Russian energy.
Whether it's oil or gas, sanctions on Russia and Moscow’s countermeasures, will keep fuel prices high, aggravating the cost-of-living squeeze we were feeling before this ghastly conflict.