Belgium, (Brussels Morning Newspaper) US exporters of liquefied natural gas (LNG) are diverting supplies from South Asia to the EU.
US President Joe Biden promised in March to help the bloc secure new gas supplies and wean itself off Russian imports, according to Reuters reporting on Tuesday.
Data from Refinitiv financial services company shows that US exports to the EU are on track to triple Biden’s pledge of additional 15 billion cubic metres of LNG this year.
While this presents good news for the US and the EU, it comes at the expense of emerging markets like India and Pakistan, which could face shortages or be pushed to tighten cooperation with Russia.
In the first six months of the year, US LNG exports to Europe stood at 39 billion cubic metres in contrast with 34 billion cubic metres shipped to the bloc in all of 2021.
If exports continue at current pace in the second half of the year, increase of US LNG exports to the EU will reach approximately 45 billion cubic metres this year.
However, the rate of export slowed down last month after the Freeport LNG terminal was closed due to a fire, with full operation expected next year.
Money talks
According to analysts, companies are diverting LNG cargoes to the EU because the move is more profitable than honouring agreements, delivering to countries like Pakistan and not paying contractual penalties.
Henning Gloystein, director of energy, climate and resources at the Eurasia Group political risk consultancy, noted that the US LNG industry “has become more flexible than most thought it could be just three months ago.”
According to data, US LNG exports to Belgium increased about 650% this year, but dropped approximately 72% to Pakistan.
However, analysts warn that the trend will not last, stressing that gas prices in non-EU markets are rising and would-be buyers are seeking court action over contract violations.
“The really brutal and harsh reality is that Europe is pricing out large parts of the emerging markets… in the long term, this is not sustainable and it’s already causing energy shortages in South Asia,” Gloystein pointed out and concluded “something has to give.”