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Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

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Shale CEO: U.S. Can ‘’Easily’' Replace Russian Gas

  • The chief executive EQT believes that the U.S. could easily replace Russian natural gas in Europe, claiming that there is both the ability and the desire to do more.
  • While it would be technically possible for the U.S. to produce more natural gas, there are logistical problems to deal with such as a lack of import terminals.
  • Europe was the biggest buyer of U.S. LNG over the last three months, but it remains unclear if this will become a long-term trend.

U.S. natural gas can easily replace Russian gas in Europe, the chief executive of EQT, the country's largest producer of gas, told the BBC in an interview.

"We've got the ability to do more, the desire to do more," Toby Rice told the BBC, estimating that the United States had enough gas to quadruple current output by 2030.

However, boosting exports of natural gas to Europe is not only a question of availability and willingness on the part of gas producers. There are other obstacles preventing U.S. gas from taking the place of Russian gas in Europe.

These include a lack of import terminals on the continent as well as export terminals in the United States itself. Currently, there are eight operating export terminals on the Gulf Coast, and 14 more have been approved for construction. However, the process of taking an LNG facility from final investment decision to operation takes several years.

There has also been political opposition to increasing LNG export capacity on climate change grounds. Recently, a coalition of more than a hundred advocacy groups called on the six largest U.S. lenders to stop financing new LNG export facilities on the Gulf Coast.

Yet even if this opposition was absent, the purely technical problems to a major boost in U.S. LNG exports to Europe would remain. There is also the question of cost. LNG is costlier than pipeline gas, and the longer the distance it has to travel to its final destination, the more expensive it becomes.

Be that as it may, Europe was the biggest buyer of U.S. liquefied natural gas over the last three months, taking in more than half of the total LNG exports in December and February.

Europe, however, is running out of regasification capacity. Spain and France have the biggest import capacity in the EU, with the UK coming in second in Europe as a whole with 50 billion cubic meters in annual nameplate LNG import capacity. Germany, on the other hand, the biggest gas market in Europe, has zero LNG import terminals.

By Charles Kennedy for Oilprice.com

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  • Mamdouh Salameh on March 14 2022 said:
    Are we now moving into the realm of fantasy? Russia currently exports 200 billion cubic metres annually (bcm/y) of piped gas to the EU in addition to 15-16 million tonnes of LNG per year (mt/y) giving an equivalent total of LNG of 160-161mt/y.

    The US Energy Information Administration (EIA) projects that US LNG exports will reach 11.5 billion cubic feet per day (bcf.d) in 2022 equivalent to 86.19 mt/y. This is 53% of current Russian piped gas to the EU. Moreover, the EIA figure is merely a projection not actual exports.

    The US has currently eight operating export terminals on the Gulf Coast, and 14 more have been approved for construction. However, the process of taking an LNG facility from final investment decision to operation takes several years.

    To export an equivalent amount to Russia’s 160 mt/y, the United States needs to have 7 additional operating export terminals. This will take several years to build. By that time Nord Stream 2 would have been fully certified adding 55 bcm/y of gas (equivalent to 40 mt/y of LNG) to Russia’s already160 mt of annual exports to the EU.

    Moreover, to replace Russian piped gas with US LNG the EU needs to have 15 operating import terminals which will take years to build.

    Then there is the cost element. LNG prices can never ever match the much cheaper Russian piped gas. The price difference alone could inflict a huge financial burden on the EU budget.

    That is why the EU will continue to depend on Russian gas supplies well into the future.

    Likewise, no country in the world or even a group of countries can totally replace Russian oil exports of 8.0 million barrels a day (mbd) composed of 5.0 mbd of crude and 3.0 of refined products in the current prevailing conditions in the global oil market. Neither OPEC+ nor Venezuela or US shale oil or Iran could raise their production enough to replace Russia oil exports.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • George Doolittle on March 14 2022 said:
    Even more easily replace our own oil in point of fact...which is obviously far more important.


    "Unless you're PM BJ from GB!" and oddly so. "Energy crisis in Britain!"

    Huh.

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