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EU And U.S. Pledge To Boost Natural Gas Trade

gas infrastructure

In a breakthrough in EU-U.S. trade talks, President Trump and European Commission (EC) President Jean-Claude Juncker agreed yesterday in a meeting at the White House to suspend new trade tariffs while negotiating over trade.

Both Trump and Juncker pledged to expand European imports of U.S.-sourced liquefied natural gas (LNG) and soybeans. They also vowed to lower industrial tariffs, excluding autos.

The U.S. and EU will “hold off on other tariffs” while negotiations proceed, as well as re-examine U.S. steel and aluminum tariffs and retaliatory duties imposed by the EU “in due course,” Juncker said in remarks to reporters after the much-heralded meeting.

Analysts claim that the pledges have pulled the two major partners from the brink of a possible full-fledged trade-war.

Trump, for his part, said after the meeting “We had a big day, very big. We are starting the negotiation right now, but we know where it is going.” Trump hailed what he called “a new phase” of trade relations. The two didn’t take questions from reporters.

As recently as last week, at a cabinet meeting Trump warned that he would move forward with 25 percent EU auto tariffs if the meeting with Juncker didn’t go well. However, the results of the meeting were met with guarded relief on both sides of the Atlantic. The development also comes as Trump continues to ramp up trade tensions with China, Mexico and Canada.

Gas matters

Juncker also said Europe would build more LNG terminals to import U.S.-LNG. Trump said, “they want very much to do that, and we have plenty of it… They will be a massive buyer [of gas], and they will be able to diversify their energy supply.”

Both Juncker and Trump’s comments on more U.S.-sourced LNG heading into Europe will have major geopolitical ramifications in both the EU and even Russia.

The EU for its part, notably Germany, has pushed back in the past year and a half against Trump’s gas import push into European markets. Many on the continent see Trump’s promulgation of U.S. gas as merely a ploy to enhance American LNG producers masked in the guise of security concerns. Related: Strong Dollar Could Cap Oil Prices

However, several EU members, notably Poland and the Baltic states, have welcomed U.S. gas imports as a way to break free from decades old reliance on Russia’s gas monopoly in Europe.

Russia, for its part, has long accused Trump of politicizing EU gas imports, also claiming that his concerns over the ongoing Nord Stream II gas pipeline are unfounded. Nord Stream II is a 759 mile (1,222 km) natural gas pipeline running on the bed of the Baltic Sea from Russian gas fields to Germany, bypassing existing land routes over Ukraine, Poland and Belarus. It would double the existing Nord Stream pipeline’s current annual capacity to 110 bn cubic meters a year and is expected to become operational by the end of next year, enough to meet almost a quarter of total demand across the EU.


After the Trump-Juncker meeting, replies started coming out of Russia, mostly criticizing the meeting. Financial policy analyst Daniel Sankey told Sputnik News Wednesday that the joint U.S.- EU announcement was so thin of substantive details that it could be only described as “political theater.”

"Ultimately this is political theater where the Trump administration is going to try to play up these minor concessions as some kind of substantial victory to increase support from his base," he said. Related: Is This The Next Coal Megaproject?

"Both sides have pledged to stop imposing tariffs while the talks continue. However, should the talks break down; we'd be back to square one. The EU is throwing some minor concessions to the US, most likely for the US to save face, and the solid details of those concessions have yet to materialize, so we will have to wait and see if they are substantial or not," Sankey added.


However, Russian angst notwithstanding, any formal gas agreement that could be reached between the U.S. and EU would have enormous ramifications for not only floundering U.S.-EU relations but for European gas markets. Despite European claims to the contrary, Russia’s gas monopoly poises one of the greatest security risks facing EU members, and since many EU members are part of NATO as well, it also poses a significant risk to the NATO alliance.

Russian President Vladimir Putin has in the past shown little restraint in using natural gas supply to Europe as a geopolitical weapon and has more than once cut off or threatened to cut off gas supply during the winter over political issues.

In 2016 almost 90 percent of Russia’s 7.5 trillion cubic feet (Tcf) of natural gas exports were delivered to customers in Europe via pipeline, with Germany, Turkey, Italy, Belarus, and the UK receiving the bulk of these volumes, according to the EIA.

By Tim Daiss for Oilprice.com

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