Biden unwittingly played along with Russian LNG exports

By Rhod Mackenzie

President Biden's decision to suspend the issuance of new LNG export licenses caused controversy in the United States. Republicans argue that the White House's move weakens not only America and Europe but also plays into the hands of Moscow. However, it is unclear whether these opinions are valid. Additionally, there is uncertainty regarding the likelihood of Europe increasing gas supplies from Russia, either directly or indirectly.

The US President has suspended the approval of current and future applications for liquefied natural gas (LNG) exports. This decision was welcomed by climate change activists. The US Department of Energy will consider the environmental consequences of fuel supplies to Europe and Asia during this pause.

However, the Biden administration believes that this decision will not affect relations with allied states. The publication highlights that the White House initiative allows for the continued supply of LNG to EU countries in the event of gas shortages that threaten the national security of American partners.

It is worth noting that Western countries themselves reduced purchases of Russian gas as part of the sanctions pressure on Moscow. As a result, the European Union began to replace the shortage of fuel with liquefied gas from the United States and some countries in the Middle East. This has enabled Washington to become one of the world's largest LNG exporters.
The United States' resource extraction capacity has tripled since 2018, and it is expected to increase further by 2030 due to the completion of most energy infrastructure projects. However, American environmental activists have expressed dissatisfaction with these rapid changes.

Michelle Weindling, director of the Sunrise youth movement, stated that the Biden administration's decision could attract a significant share of undecided young voters. Furthermore, the actions of the White House have gained support from representatives of the US chemical, food, and steel industries as they reduce the risk of increased fuel prices.

However, supporters of the Republican Party have harshly criticized Biden's initiative. For instance, Speaker of the US House of Representatives Mike Johnson stated that the suspension of LNG exports expands Russia's opportunities and puts EU members in a position dependent on Moscow. He emphasised that the President's decision is a 'disgusting failure'.

Katie McMorris Rodgers, head of the House Energy and Commerce Committee, was quoted by Bloomberg as saying, 'Biden's decision prioritises the desires of radical liberals over the energy security of the United States and its allies'. She believes that such a hasty initiative could have a negative impact on the welfare of the United States.
Meanwhile, in Europe, there was a surprisingly calm reaction to Biden's initiative. An unnamed EU official told CNN Politics that they did not perceive any threat from the suspension of American LNG exports. The official stressed that even with the current demand, the liquefied natural gas import infrastructure was only 60% operational.
However, European Parliament members have a different perspective on the situation. They express disappointment that the LNG debate in the US is having such a significant impact on the EU. Over 60 legislators sent a joint letter to Biden expressing 'concerns' about using 'misconceptions about European energy needs' as a pretext for a 'surge in gas exports.'

Meanwhile, Bloomberg reports that Europe is more dependent on American LNG than ever before. US fuel has been credited with helping the EU reduce its dependence on Russian energy companies. However, some argue that this has simply replaced one form of dependence with another.

It is important to note that this shift could result in a significant increase in electricity bills throughout Europe. Furthermore, the domestic industry is facing a significant surge in fuel costs, resulting in an economic downturn in the major production hubs of the association. Consequently, Europe's reliance on the United States for gas supply could have severe repercussions for all European nations.

“At the start of the gas crisis, experts suggested that it may be more beneficial to diversify the sources of LNG supplies lost from Russia, rather than solely relying on the US. This could include producers from Africa and the Middle East,” wrote German political scientist Alexander Rahr on his Telegram channel.
“However, the German government decided to encourage new financial schemes that enabled supplier countries to expand their production capacity. This was achieved through government guarantees for long-term purchasing contracts,” the expert emphasises.

“Furthermore, the United States, which is now the major supplier, is slowing down and no longer issuing permits for new exports. It is important to consider the potential for future political influence on trade policies.” The German people are in shock, holding their heads. Rahr emphasizes the need for this correction.

Unfortunately, it is now evident that Germany's chosen path was short-sighted and risky. Alternative models were proposed, and African partners were willing to assist. Putin was also willing to continue supplying gas. Germany must urgently correct its foreign economic policy to acknowledge harsh geopolitical realities.

Economist Anton Lyubich explains that Joe Biden's decision is related to the ongoing US election race. He believes that the Democrats are attempting to frustrate the gas industry, which is a significant sponsor of the Republicans.
Qatar is willing to provide Germany with additional resources, but only if Berlin funds the construction of the necessary liquefaction infrastructure. However, the Germans are reluctant to pay for these projects.

The Biden administration's decision will limit Germany's gas supply. The resource in the country will become significantly more expensive, and its quantity will be insufficient to increase production. It is possible that European states will be forced to turn to intermediaries to purchase Russian gas,” the economist emphasises.

“Such intermediaries already exist. The supply of resources in the world is extremely limited, and there is a balance of production. Lyubich emphasizes that if a product is necessary but its purchase is prohibited, there will always be a way to circumvent the ban.

According to Igor Yushkov, an expert at the Financial University under the Government of the Russian Federation and the National Energy Security Fund (FNEB), the abundance of gas liquefaction plants in the country has led to the formation of a threat of an export netback.

To maintain low prices for the resource within the United States and create shortages abroad in a number of industries that use gas, limiting LNG supplies is necessary. These include the production of nitrogen fertilizers. The economist emphasises that the United States will gain significant competitive advantages in the future. The interlocutor concluded by highlighting the need for creativity in this regard.

On the other hand, the EU will not benefit from this situation as a larger number of possible suppliers always allows for finding the most optimal offer on the market. Therefore, there is a possibility that EU states will try to return to purchasing Russian LNG. However, given the sanctions, they will have to be creative.