This article is the on-site version of the Energy Source Newsletter. Premium subscribers can sign up here to send their newsletters every Tuesday and Thursday. Standard subscribers can upgrade to premium here or explore all FT newsletters
Hello, welcome to the Energy Source. Come from New York and Brussels.
Oil prices settled at two-week highs on Monday amid hoping that a full-scale trade war between China and the US could be avoided following the trade between the two countries that cut tariffs at least temporarily.
Being optimistic among investors about a potential detente between the two biggest economies in the world has increased the value of the global stock market and the US dollar.
My FT colleagues stayed with China and published a big read on how President Xi Jinping caused the electrical revolution, addressing the important vulnerability of the Asian nation, namely the dependence on foreign energy.
China is moving forward to become the world’s first “electrostatic acid” and is increasingly driven by clean technology as the proportion of electricity and energy from the economy is increasing, they write. Beijing provides a strategic buffer from the US trade separation and growing geopolitical tensions.
The country is not only rapidly moving towards self-sufficiency in energy from safe domestic sources, but it is also wielding vast forces against the market for the resources and materials that will support future technologies.
As for our main items today, Alice Hancock is deciphering what Brussels’ new Russian gas plan means for our LNG exporters.
Thank you for reading, Jamie
What does the EU’s mysterious Russian gas program mean for US exporters?
The future could be one of two ways to liquefy US natural gas exporters.
As the EU’s proposal to phase out all Russian gas imports by 2027 goes into plans, the final investment decision on its LNG capacity of 45.5 million tonnes per year could be this year and the future, according to S&P Global figures released last Thursday.
But if that’s not the case, if Russian pipeline gas even had a “conservative” return to Europe, it would be subject to US sanctions along with imports from Russian gas facility Arctic LNG 2, which puts a $120 billion investment in the US industry at risk.
The US accounts for about a fifth of EU LNG imports. Ryanpee, a U.S. Energy Agency official, said this week that Washington expects US LNG to double by the early 2030s.
“The future of Russia’s gas supply remains an important uncertainty for the opening of the US market,” S&P said.
A key question for the US LNG industry is whether the EU plans actually work.
The bare bones, which the European Commission is branding a “roadmap” to emit Russian fossil fuels from the EU system by 2027, when it was released last week, is to enforce more disclosures of information about contracts with Russian suppliers. It asks all EU countries to submit plans for ways to phase out Russian gas and oil. Spot contracts will be banned by the end of this year, and long-term contracts will be made by 2027.
The issue with the much-anticipated planning is that no one outside the committee is convinced that the company can safely infringe on contracts with Russian suppliers without paying heavy compensation. Industry executives and ministries are concerned about legal risks.
“The legally most solid way to ban Russia’s remaining energy imports is sanctions, but that route is banned because it requires unanimous approval by all EU governments.
The committee suggests that it found a workaround that promises to present the proposal in June, with only member states agreeing.
In March 20222, EU countries pledged to phase out Russian coal, oil and gas imports “as soon as possible” following Moscow’s full-scale invasion of Ukraine in February 2022. Since then, “We have avoided doing other things besides working on legal possibilities to limit imports in Russia to limit legal possibilities. The risk avoids the economic risks of market participants and suppliers.”
“We know very much what we have in mind,” the official added, denying further details.
Member countries are mystical.
“We’ve been looking at ourselves for over two years and have not really found anything that works beyond the form of sanctions or sanctions,” said a European official.
One way might be to argue that this justifies a “power” interruption of contracts, as EU regulatory frameworks have made it difficult for them to continue contractual obligations in accordance with normal business since the start of the war.
However, she added: “This strategy isn’t without risk, because companies that get out of the contract will be involved in costly arbitrations.”
EU diplomats suggest that the idea of increasing transparency in the market will help track molecules and put pressure on buyers. However, that is not a legal basis for the prohibition.
Companies such as Sefe, a German energy company that imports Russian LNG, say they are analyzing the committee’s documents. The market barely responded to the announcement that it was largely priced with a complete gradual out of Russian gas. Prices rose very slightly last Tuesday, but have returned to below 35 Euro/mwh after the announcement went to 36.05 Euro per megawatt hour.
The EU plan was announced as debate is running simultaneously on how Brussels can assure the US that EU companies will purchase more LNG from across the Atlantic, as part of their efforts to lower the Bloc trade deficit and fill President Donald Trump.
Several ideas have been proposed, such as matching demand using the EU’s joint gas purchasing programme and presenting it to the White House that shows how much gas the block can buy.
Marco Alverà, the chief executive and co-founder of Tree Energy Solutions, which operates one of Europe’s largest LNG terminals, is lobbying several EU commissioners at BLOC to have a “strategic gas reserve” that can “undertake additional long-term LNG purchases and support transaction discussions.”
Chris Treanor, executive director of Page, a coalition of US LNG producers, said the EU roadmap should show accelerating “efforts to promote low-methane, long-term, flexible LNG contracts from the US.”
Dan Jorgensen, the EU Energy Commissioner, said it was “too early” to speculate on how the committee would benefit energy sources.
One EU diplomat observed that S&P expected online to be the 45.5 million metric tons of America annual annual could be the casualty of its own success. “There are many questions about all new LNG projects or liquefaction facilities in the United States. (Alice Hancock)
power point
Donald Trump is hoping to bromance and billions when he travels to the Bay, hoping to secure a multi-billion dollar deal.
Aanu Adeoye reports on Nigerian companies leading the historic change in ownership of oil wealth as foreigners retreated from African countries.
The Energy Group has scrapped the Texas-supported gas power plant project amidst turbine delays and spiral costs.
The energy source has been written and edited by Jamie Smith, Martha Muir, Alexandra White, Tom Wilson and Malcolm Moore, with the support of FT’s global team of reporters. Contact us at Energy.source@ft.com and follow us on X at @ftenergy. Check out previous editions of our newsletter here.
Recommended newsletter
Moral Money – Our inevitable newsletter on socially responsible business, sustainable finance and more. Sign up here
Climate Graphics: Description – Understand the most important climate data of the week. Sign up here
