By Samir Muradov
Amid the complex geopolitical situation and the evolving energy landscape in Europe, the role of liquefied natural gas (LNG) supplies has become increasingly critical. In July 2024, a significant trend emerged, indicating a notable convergence between the two largest LNG suppliers to the European market—the United States and Russia. This article explores the causes and consequences of these developments, along with an analysis of the factors influencing the current supply dynamics and the global energy market’s power balance.
As reported by News.Az, citing nefteqaz, by the end of July 2024, Europe found itself on the brink of an energy landscape shift, having received substantial volumes of LNG from its two largest suppliers—the United States and Russia. According to Bloomberg data, Europe imported 1.5 million tons of LNG from the United States and 1.3 million tons from Russia, highlighting a narrowing gap between the two countries’ supplies to its lowest point since late 2021.
These figures underscore an unexpected turn of events, considering the long-standing efforts by European policymakers to reduce reliance on Russian fuel. However, July’s results show that Russia came close to surpassing the United States as Europe’s largest LNG supplier. This development was not due to a significant increase in Russian supplies but rather to a reduction in U.S. exports.
LNG supplies from both countries nearly equalized as American energy companies prioritized markets with higher prices, driven by global LNG market dynamics. In July 2024, LNG prices in Asia surged amid extreme weather conditions, leading to shifts in supply routes. Egypt, facing similar challenges due to heat and declining production, also set premium prices for imports to attract the necessary LNG volumes.
Additionally, disruptions at U.S. LNG plants due to tropical storms exacerbated the situation in Europe. The Freeport LNG plant, one of the largest LNG exporters in the United States, was forced to halt production for more than two weeks due to Hurricane Beryl. By the end of July, the plant had resumed operations, processing 2.2 billion cubic feet (approximately 62.3 million cubic meters) of natural gas.
The U.S. strategy for exporting LNG to Europe aimed to deliver at least 15 billion cubic meters annually, provided that prices aligned with long-term market trends. In June 2022, the United States became the largest gas supplier to Europe, surpassing Russia for the first time in history.
However, the supply gap between the U.S. and Russia significantly narrowed from January to July 2024—from 3.7 million tons per month to 200,000 tons per month. This indicates that despite sanctions and political pressure, Russia has continued to export substantial volumes of LNG to Europe, maintaining between 850,000 and 1.6 million tons per month since the start of the special military operation in Ukraine.
These developments highlight the complexity and multifaceted nature of the global energy market, where geopolitical and economic factors produce unexpected outcomes for Europe’s energy balance. The narrowing supply gap between the U.S. and Russia not only reflects the current state of affairs but also suggests potential future shifts in Europe’s energy supply structure. Despite European efforts to reduce dependence on Russian energy resources, reality shows that Russia maintains a strong presence in this market, skillfully leveraging its strategic position and infrastructure capabilities. Meanwhile, the United States, facing domestic challenges and external climate factors, is forced to adapt its export routes and strategies based on global prices and demand. This dynamic power balance in Europe’s energy market will play a crucial role in shaping the region’s energy policy in the coming years, creating new challenges and opportunities for both suppliers and consumers.
