American LNG and the EU-Russia Relationship: The End of Moscow’s Energy Weapon? College of Europe EU Diplomacy Paper 2/2021.

Cabras, Stefano (2021) American LNG and the EU-Russia Relationship: The End of Moscow’s Energy Weapon? College of Europe EU Diplomacy Paper 2/2021. [Working Paper]

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Abstract

This paper examines to what extent the shale revolution in the United States (US) and the new US position in the global energy market has impacted the European Union’s (EU) gas market and energy relationship with Russia. Making use of an analytical framework to study energy interdependence, the paper notes that the EU has long promoted a liberal view of energy trade, founded on economic cooperation and market rules. On the contrary, Russia and the US have tended to adopt a realist perspective, whereby energy is viewed as a strategic asset that can be used to achieve geopolitical gains. Moscow, in particular, has been accused of using gas as a weapon to achieve geopolitical gains. The study finds that US liquefied natural gas (LNG) coming to the market as of 2019 has generated an oversupply and strengthened the position of EU buyers vis-à-vis the Russian Gazprom. Moreover, the innovative features introduced by US LNG have to some extent de-politicized the gas business and made the EU’s market-oriented, liberal approach more effective. The paper concludes that due to today’s abundance of gas supply options and to the increasing competitiveness of renewable alternatives to natural gas, the success of US LNG in Europe will depend both on its price competitiveness and on whether the Biden Administration will succeed in reducing the greenhouse gas emissions associated with US LNG and make it compatible with the objectives of the European Green Deal.

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