Is Europe really willing to sacrifice the goal of reducing dependence on Russia if US LNG continues to be more expensive than other sources of supply?
Over the past two years, the European Union has been the largest importer of LNG liquefied natural gas from the US. After imposing a series of sanctions on Russia and deciding to ban Russian LNG imports from 2027, European countries have strongly turned to supply from the US to ensure energy security.
However, the market has just witnessed a notable development when in the most recent month, many European customers reduced their purchases of US LNG because the selling price was no longer competitive. LNG prices delivered from the US are significantly higher than some other supplies in the international market, causing importers to prioritize lower-cost shipments.
This development occurred right at the time the trade agreement framework between the US and the European Union began to take effect. The agreement signed between President Donald Trump and European Commission President Ursula von der Leyen aims to strengthen trade and energy cooperation, of which US LNG is considered one of theimportant pillar.
Comparison table of factors affecting LNG purchasing decisions
Criteria LNG US LNG Qatar LNG Russia
Recent selling prices High Competitive Lower in some markets
Shipping times to Europe Average Longer Shorter
Political risk Low Low High due to sanctions
Long-term outlook Strong capacity growth Sustaining growth Limited from 2027 in the EU
The notable point is that Europe does not completely abandon US LNG but only adjusts purchasing activities according to market signals. Energy companies always prioritize economic efficiency, especially when gas prices fluctuate strongly and electricity and industrial demand have not fully recovered.
Besides, global LNG supply is becoming more and more diverse. Qatar continues to expand its North Field projects with huge capacity, while Australia maintains its position as the leading exporter. This creates direct competitive pressure on US exporters.
Table of factors affecting LNG prices
Factor Level of influence
Henry Hub gas price in the US Very high
Liquefaction cost High
High sea freight charges
Average world oil price
Summer and winter electricity demand Very high
Competition from Qatar and Australia High
In the short term, European LNG demand remains dmaintained at a high level due to the goal of reducing dependence on Russian gas. However, that does not mean all shipments from the US are given priority. If prices continue to be higher than competitors such as Qatar or Australia, European businesses will continue to choose supply sources that bring better economic efficiency.
For America, this is no small challenge. This country is investing tens of billions of dollars to expand LNG liquefaction plants and expects Europe to be the largest consumer market for many years to come. If the price gap is not narrowed, new LNG projects may face increasing competitive pressure, even in the market considered America's most strategic customer.
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