The European Union pledged $ 250 billion for US energy … mirage or reality?
Analysts believe that the European Union pledged to purchase US energy supplies of $ 250 billion annually, because it will require re -directing most American energy exports to Europe, and the European Union has little control of the energy imported by its companies.
The United States and the European Union have concluded a framework trade agreement on Sunday, which will impose 15 percent American fees on most European goods. The agreement included a pledge from the European Union to spend $ 250 billion annually on US energy – oil and LNG and nuclear technology – over the next three years.
Numbers’ challenges
Total US energy exports to all buyers worldwide in 2024 amounted to about 318 billion dollars, according to US Energy Information Management data, according to Reuters. From this amount, the European Union imported a total of $ 76 billion of US oil, liquefied natural gas and solid fuel such as coal in 2024, according to Reuters accounts based on the “Eurostat” data.
Analysts said that doubling these imports more than three times is unrealistic. According to Arturo Reglado, chief liquefied natural gas analyst at Kepler, “the scope of the energy trading in the agreement exceeds the facts of the market.”
“The US oil flows will have to go entirely towards the European Union to reach the goal, or you will need the value of liquefied natural gas imports from the United States to the increase of six times,” he said.
Competition for American exports
There is strong competition for US energy exports, as other countries need these supplies -and they have pledged to buy more in commercial deals. Japan agreed to “great expansion of US energy exports” in its trade agreement with the United States last week, the White House said in a statement. South Korea has also shown an interest in investing and buying fuel from the LNG project in Alaska and is seeking a commercial deal.
American energy competition can lead to standard American oil and gas prices, and encourage American producers to prefer exports over the local offer. This may make fuel and energy costs more expensive, which will constitute a political and economic headache for American and European leaders.
Mysterious details and the responsibility of companies
None of the parties disclosed the details of what was included in the energy deal -or whether it includes items such as energy services or parts of power networks and stations.
The European Union estimates that the plans of member states to expand nuclear energy will require hundreds of billions of euros in investments by 2050. However, its total imports of nuclear reactors reached 53.3 billion euros only in 2024, according to trade data.
A senior European Union official, who declined to be named, said that the energy pledge reflects the European Union’s analysis of the amount of US energy supplies that can be absorbed, but that will depend on investments in the oil infrastructure and liquefied natural gas in the United States, the European import infrastructure, and the capacity of charging. The official added: “These numbers, again, were not taken from nothing. So yes, it requires investments. Yes, it will differ according to energy sources. But these are investigative numbers. ” He explained that there is no public commitment to delivery, because the European Union will not buy energy -even its companies will do so.
Special companies import most of Europe oil, while a mixture of private companies and government of government is imported. The European Commission can collect the demand for LNG to negotiate better conditions, but it cannot force companies to buy fuel. This is a commercial decision.
“It is simply unrealistic. Either Europe pays a very high price that is not reflected in the market for the American LNG, or it imports very large quantities of liquefied natural gas, more than it can accommodate.
American production and the future of European demand
The United States is already the largest liquefied natural gas and oil supplier of the European Union, with 44 percent of the needs of the European Union of LNG, and 15.4 percent of its oil in 2024, according to European Union data.
Jacob Mandel, head of research at Aurora Energy Research, said that raising imports to the target will require an expansion in the production of American liquefied natural gas that exceeds what is planned until 2030. He added: “You can add capacity. But if you are talking about the scope that will be necessary to achieve these goals, the $ 250 billion, it is not really achieved. ”
Europe can purchase an additional $ 50 billion of US LNG annually with increased supplies, he said.
Replace Russian supplies
The European Union said it could import more American energy as its plan is to end Russian oil and gas imports by 2028.
The European Union imported about 94 million barrels of Russian oil last year -3 percent of crude oil purchases for the mass – and 52 billion cubic meters of liquefied natural gas and Russian gas, according to European Union data. For comparison, the European Union imported 45 billion cubic meters of American LNG last year.
However, analysts said that the increase in European fuel purchases will conflict with the expectations of the decline in demand in the European Union as it turns into clean energy.
“There is no great need for the European Union to import more oil from the United States, in fact, it reached the peak of oil demand several years ago,” said Schroeder and Parmar.
