French media article: Europe is difficult to get rid of the geopolitical shackles of natural gas

On February 7, the website of the French newspaper Le Figaro published an article titled "Europe's New Natural Gas Geopolitics", written by Renault Girard. The full text is excerpted below:

Never in Europe's modern history have the price of natural gas been higher than it is today. Natural gas prices per million British thermal units (BTU) averaged $4.45 in 2019 and soared to $36.6 in 2021. The main reason is structural "lack of gas", and European governments have also begun to take measures. How should Europe, where countries are interconnected, face this situation?

Europe now relies on Russia for about 40 percent of its gas supply. You know, 21% of Europe's electricity production depends on natural gas (nuclear power accounts for 26%, coal and hydropower each account for 13%, renewable energy accounts for 26%). In addition to the powder polluting the air, coal power emits twice as much carbon dioxide as natural gas. Germany, which abandoned nuclear power after the 2011 Fukushima nuclear accident, relies on coal power and 15 percent on natural gas, 55 percent of which comes from Russia.

For half a century, the Russians have been supplying gas to Europe, and they are always fulfilling long-term gas supply contracts. However, since the crisis in the West and Russia over Ukraine, Americans have repeatedly accused Europe of being too dependent on Russia's energy. The United States believes that the Germans have been too soft on Moscow because of their dependence on Russian gas.

U.S. President Joe Biden faces a "dilemma": whether to cater to Europe's LNG supply or stick to the environmental policies of the Democratic left. The problem is that the Americans have not proposed alternatives to their European allies. But Biden seems to have begun to pay attention to this issue.

On Jan. 31, Biden received Qatari Emir Tamim bin Hamad Al-Thani at the White House. After the meeting, Biden declared that the Gulf state would be listed as an "important non-NATO ally." The United States actually wants to rely on Qatar to significantly increase LNG supplies to Europe. Qatar is now the world's second largest exporter of liquefied natural gas. Long before the Biden administration's request, Qatar had already decided in February 2021 to increase natural gas production, starting with $50 billion in cape Levant in the northeast from the end of 2025, and some of the gas after the expansion will be supplied to Europe.

At the same time, what can Americans, who have huge reserves of shale gas, expect from providing europe with long-term supplies? The United States has just become Europe's largest supplier of LNG. In general, LNG costs more than pipeline transmission (mainly from Norway and Russia). Today, the price of natural gas in the US market is so cheap that European countries are interested in negotiating a 20-year LNG supply contract with the United States.

Also, while there won't be much of a problem with U.S. capacity, the U.S. may not be able to meet Demand from Europe. In fact, environmental restrictions are likely to increase during the Biden administration. Large investment funds and Western banks are now constrained by new gas projects. These large private institutions publish environmental protection, social responsibility, and corporate governance reports every year. In order to make the special report look better, major private institutions will increasingly be inclined to abandon investment in natural gas projects.

The role of natural gas is essential to meet the energy transition requirements of the 21st United Nations Climate Change Conference (COP21). The first is to phase out coal power, and nuclear energy should also increase production expansion, because nuclear energy is the only energy source that does not emit carbon dioxide.

Therefore, it is hoped that the EU and the UNITED States can reach energy cooperation in the short term. It is clear that such cooperation should be achieved in the context of long-term and diplomatic freedom. The Europeans, of course, will have to continue to buy Russian gas, but this will inevitably become the sword of Damocles hanging over their heads.

Source: Reference News Network