US looking at contingency plans for gas supply to Europe, on the back of Russia-Ukraine tensions

In a significant development the Biden government has held talks with several international energy companies on putting in place contingency plans for supplying natural gas to Europe in the event gas supplies to Europe are disrupted because of Russian and Ukraine tensions.

Washington is concerned that Moscow is potentially preparing to launch a military maneuver against Ukraine, just like it did in 2014 with Crimea.

The European Union depends on Russian gas for nearly a third of its gas supplies, and any U.S. sanctions on Russia or any conflict could potentially disrupt these supplies.

Further, any potential interruptions of gas to Europe by Russia would only exacerbate an energy crisis caused by a fuel shortage. Rising power prices have driven up consumer energy bills as well as the cost of doing business triggering protests in some countries.

According to two industry sources familiar with the discussions at hand, US State Department officials have approached energy companies to ask where additional supplies might come from in the event of their need. The companies have supposedly said, since global gas supplies are tight, there is very little gas available to substitute Russian supplies to the EU.

The discussions with energy companies were led by senior advisor for energy security Amos Hochstein, said a senior U.S. State Department official on the condition of anonymity.

Incidentally, the State Department did not ask the companies to increase output, said the official.

“We’ve discussed a range of contingencies and we’ve talked about all that we’re doing with our nation state partners and allies,” said the source.

“We’ve done this with the European Commission, but we’ve also done it with energy companies. It’s accurate to say that we’ve spoken to them about our concerns and spoken to them about a range of contingencies, but there wasn’t any sort of ask when it comes to production.”

The State Department had also asked companies on what capacity they had to raise supplies, said the source. They had also asked whether the companies had the capacity to increase exports and postpone field maintenance if necessary.

So far it is unclear which companies have been contacted by the State Department.

Totalm Chevron Corp, and Qatar Energy did not immediately respond to requests for comments; Exxon, Royal Dutch Shell and ConocoPhillips declined comment on when they had been asked if they had been contacted.

“Assessing potential spillovers and exploring ways to reduce those spillovers is good governance and standard practice,” said a spokesperson for the U.S. National Security Council.

“Any details in this regard that make their way to the public only demonstrate the extensive detail and seriousness with which we are discussing and are prepared to impose significant measures with our allies and partners.”

“The United States promised to have Europe’s back if there is an energy shortage due to conflict or sanctions,” said the second industry source while adding, “Amos is going to big LNG producing companies and countries like Qatar to see if they can help the United States,” in reference to Hochstein.

In the event Russia decides to reduce gas supplies to Europe, European buyers would need to seek cargoes of superchilled gas to compensate.

U.S. exports of liquefied natural gas (LNG) are set to rise significantly in 2022. Europe will compete for LNG supplies from suppliers including the US and Qatar, with top LNG consumers such as Japan and China.



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