Questions Emerge over Future of U.S. Trade Deal with Europe, Including LNG

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Written by Daniel Graeber for IIR News Intelligence (Sugar Land Texas)

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SummaryThe Green Party of Germany said U.S.-sourced LNG should be snubbed amid the row over Greenland. The U.S. government is backing LNG as a source of global energy security.

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Trump's Actions Not Acceptable

With a German political party looking to snub U.S.-sourced liquefied natural gas (LNG) over the row over Greenland, the International Monetary Fund said the decline in relations among western powers poses a risk to global growth.

Katharina Droge, the parliamentary leader of the German Green Party, told broadcaster ZDF that a multibillion-dollar arrangement reached last year for European Union (EU) purchases of LNG from the United States should be reconsidered due to ongoing disputes over Greenland.

"In the EU, we need clarity that Trump's actions will not be accepted," she said.

That comes as Ursula von der Leyen, the president of the European Commission, said "a deal is a deal" when it comes to U.S. trade relations. Both economies reconfigured trade relations last year, though U.S. President Donald Trump may be reneging on that with tariff threats over those opposed to the U.S. annexation of Greenland, a Danish territory.

Meanwhile, the BBC, citing sources familiar with the matter, reported Tuesday that European leaders are mulling an exit from last year's trade deal with the U.S. The deal calls for Europe to purchase some $750 billion worth of energy products over the next three years, from nuclear fuel to LNG. The framework for the LNG commitments was already criticized as out of reach, however, both in terms of the level of supplies from the United States to storage capacity in Europe.

Trump's Executive Order 14154, introduced last year as a means of "unleashing American energy," advocates for exports of LNG as a way to ensure energy security for its allies. The United States is the world leader in LNG exports, helping to buffer the European economy against the loss of Russian supplies due to sanctions imposed over the war in Ukraine.

Trump's National Security Strategy, released in November, seems critical of the historic relationship with the European Union, however. Instead, the Trump administration is looking to the Monroe Doctrine from 1823, which argues the United States should establish a sphere of influence over the Americas.

Economies such as Germany, France and the Netherlands are historic imports of U.S.-sourced LNG, with the Netherlands dominating the pack. But recent tensions have caught the attention of the International Monetary Fund (IMF), which warned the potential dissolve of the western alliance is a threat to the global economy.

U.S.-EU Relations are a Risk, IMF Says

The IMF on Monday raised its global economic growth forecast by 0.2% to 3.3%, pointing to improved ties between the United States and China. But an escalation of tensions between the United States and Europe poses a "major risk" to growth, the agency said.

Elsewhere, the Paris-based International Energy Agency (IEA) warned the "wave of new LNG export projects" could eventually create price headwinds and reduce investments, "with implications for subsequent years."

From Alaska to the U.S. Gulf Coast, Trump has sanctioned a handful of new LNG projects since returning to office. Of those, an LNG facility in Alaska was singled out in executive action last year.

Glenfarne Alaska LNG (Anchorage, Alaska) is the majority owner and developer of the planned Alaska LNG project. Phase 1 would include the construction of a 765-mile, 42-inch pipeline that would address Alaska's domestic energy needs. Phase 2 would add on coastal infrastructure that would be able to produce 20 million metric tons of LNG per year for potential exports to Asia. Subscribers to Industrial Info's Global Market Intelligence (GMI) Production Project Database can learn more by viewing the related project reports.

Not all of the U.S.-based LNG projects will make it to completion, though. Energy Transfer (Dallas, Texas) said it was suspending its efforts to develop the proposed Lake Charles LNG facility in Louisiana to focus more on its midstream assets.

U.S. natural gas demand is on the rise given the extreme cold covering most states east of the Mississippi River, while the amount of gas delivered to LNG export terminals is close to a record high.

On Tuesday, IIR Energy reported in its NATGAS Today report that feedgas reached 19.1 billion cubic feet, close to a record. The federal government predicts levels will be closer to 16 billion cubic feet per day this year.

By the Numbers

• 10% tariffs possible for European allies of the United States
• 19.1 Bcf in LNG feedgas for Tuesday
• 3.3% global growth expected, IMF finds

Key Takeaways

• EU worries about Trump's reliability
• LNG propping up EU energy security, for now
• Greenland row threatening western unity

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).