The U.S. and European allies are scouting for surplus natural gas to send to Europe in the event conflict erupts over Ukraine, according to a Bloomberg report, citing sources familiar with the matter.
Talks so far with China have been limited, according to the report, despite signals last month from that nation that at least one major supplier of liquefied natural gas (LNG) “was offering” to sell spot cargoes to the European market (GM Jan. 21, p. 1).
U.S. and European officials have also spoken to officials in Japan, South Korea, and India about diverting gas supplies to Europe, as well as to gas producers in Qatar, Nigeria, Libya, and Egypt, according to the report. However, unlike oil, the global natural gas market has little spare capacity, and it is difficult to extract more gas at short notice.
European Union (E.U.) officials have said they are discussing possible swaps of long-term gas contracts with Asian countries.
There are concerns that Europe may run short of gas should Russia invade Ukraine, a move Russian President Vladimir Putin has repeatedly denied he is planning. U.S. and European officials are concerned that Moscow may react to any retaliatory economic sanctions in the event of an invasion by turning off the gas taps to Europe, or further reducing Russian gas flows to the region.
Europe is dependent on Russia for around 40 percent of its natural gas supplies. The region’s gas prices have soared over the past 12 months amid reduced Russian gas flows to Europe (GM Jan. 14, p. 29; Jan. 7, p. 1; Dec. 31, 2021).