A recent study by S&P Global Commodity Insights highlights that any changes in restrictions on Russian gas to Europe could significantly affect U.S. liquefied natural gas (LNG) exports. The United States currently supplies about half of Europe’s LNG imports and around 15% of the continent’s overall gas supply.
The report, titled “U.S. LNG Exports at Risk: Potential Unwinding of Sanctions on Russian Natural Gas,” examines the consequences of various scenarios regarding gas supply flow to Europe.
The study outlines an “Opening the Taps” scenario, in which U.S. sanctions on Russian natural gas would be lifted, allowing increased Russian gas exports to Europe. In this scenario, over 17 million metric tons per annum (MMtpa) of new U.S. LNG projects, amounting to approximately $70 billion in investments, would be curtailed compared to the current market conditions.
Conversely, a “Phasing Down” scenario, where Europe progressively reduces its reliance on Russian LNG and pipeline gas, aligns with the EU’s REPowerEU roadmap. This scenario could potentially lead to an additional 12 MMtpa in U.S. LNG projects reaching final investment decisions, resulting in another $48 billion of investment.
The contrast between the two scenarios highlights a total of 29 MMtpa in U.S. LNG project decisions and nearly $120 billion in investment impact. Carlos Pascual, Senior Vice President at S&P Global, emphasized that changes to Russian gas flow restrictions would dramatically alter U.S. market share and investment in LNG.
The U.S. LNG market is uniquely affected due to its role as a balancing supply in global markets. The volatility of European energy policies could lead to significant changes over time based on shifting political climates.
The study uses a comprehensive, technology-driven approach to analyze the various potential impacts of changing gas supply dynamics on U.S. LNG exports, providing a foundational framework for informed policy decisions moving forward.