Europe’s reliance on Russian natural gas may not last forever. U.S. exporters could benefit.
Russia’s invasion of Ukraine has underscored major risks to security in Europe, including the region’s reliance on Moscow as a supplier of natural gas, a critical source of heating fuel.
Europe is a leading importer of natural gas, and counts on Russia for some 40% of its supply.
Maybe not for long.
Amid a wave of sanctions against Russia following its attack on Ukraine, Germany—which relies on Russia for the majority of its gas—is planning an about-face on energy policy. The country has pulled the plug on the Nord Stream 2 gas pipeline from Russia, and plans to build two terminals to receive liquefied natural gas, or LNG, which is a form of the energy source that has been cooled for transport.
Policy changes in Europe’s largest economy may be just the start of wider investment across the region to look beyond Russia for domestic gas supply in the medium term. Europe has ambitions for renewable sources to become a dominant source of energy in the long-term, but fossil fuels will continue to be needed as a stopgap.
As Barron’s has reported, one of the simplest ways for Europe to replace Russian gas flows is through LNG from the U.S., where there is more gas in the ground that can be used domestically, and output has been steadily rising.
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