BRUSSELS — In a surprising move, the European Union (EU) has announced plans to reduce its natural gas purchase targets, even as U.S. President Donald Trump maintains that increasing gas imports from the U.S. is crucial to resolving ongoing trade disputes. On Tuesday, EU member states took significant steps towards relaxing mandatory targets for gas storage refills ahead of the winter season, a decision aimed at reducing supply costs.
This development appears to defy the White House’s insistence that Europe should invest an additional $350 billion in American gas in order to rectify perceived trade imbalances. Historically, Trump has made similar demands without showing a willingness to engage constructively with European proposals, often imposing tariffs that heighten economic tensions and prompt EU nations to seek cost-saving energy solutions.
Revisiting gas purchase goals
Seven EU countries, including France, Germany, Italy, Austria, Hungary, Slovakia, and the Netherlands, spearheaded the initiative to lower gas purchase targets. They are advocating for a reduction in the mandatory storage target from 90 percent to 80 percent capacity under specific conditions. These nations argue that maintaining a higher target forces the EU to procure large quantities of gas, predominantly from the U.S., at times when prices are at their peak.
“In these turbulent times and [amid the] ongoing fight for competitiveness, it would be, of course, a better solution [to have greater flexibility] than just to stick to the current targets,”
said Lithuanian Energy Minister Žygimantas Vaičiūnas in a recent interview. He highlighted that diminished industrial demand might be an unforeseen consequence of Trump’s tariffs, complicating the EU’s ability to import American liquefied natural gas (LNG).
Energy dynamics and future projections
The EU’s reliance on American LNG has intensified since the onset of the conflict in Ukraine, which led to significant reductions in gas supplies from Russia. As Europe seeks to sever its remaining energy ties to Russia, it must also find alternative sources to replace gas that previously flowed through Ukraine.
“The EU will have to buy more American gas to make up for lost Russian supplies,”
noted Laura Page, a leading market analyst at Kpler. She added that adjusting storage targets downwards would alleviate pressure on gas imports this summer, potentially leading to more favorable pricing for the EU.
Current data from Kpler suggests that, at the prevailing rate of refilling, EU gas storage facilities are projected to reach only 78 percent of capacity by winter. Achieving the 90 percent target would necessitate overpaying for gas in the upcoming months.
Moreover, Trump’s tariffs are expected to contribute to further industrial decline within the EU, as exporters face a 20 percent levy on goods exported to the U.S. A recent analysis from ICIS anticipates a 3.6 percent decline in gas demand this year, accompanied by a 3.5 percent reduction in prices.
Andreas Schroeder, the head of energy analytics at ICIS, remarked that the new U.S. tariffs could push the situation towards “Great Depression levels,” emphasizing that the long-term ramifications for European energy markets could be profound. A decline in industrial demand is likely to result in fewer spot LNG deliveries to Europe, adversely affecting American producers as well.
Despite these challenges, EU officials have recently engaged in discussions in Washington to negotiate terms for increased LNG purchases. However, these efforts have yet to yield results, with many diplomats expressing frustration over U.S. officials’ disinterest in negotiations, even when tangible proposals to increase gas imports were presented.
Trump’s demand for a $350 billion energy purchase, articulated late Monday, appears to exceed realistic negotiation parameters. This figure translates to nearly 16 million barrels per day, surpassing the U.S.’s current daily output of approximately 13 million barrels.
“Regarding the $350 billion, what is important is that energy contracts are made based on demand and price, and these are factors that do fluctuate,”
stated Anna-Kaisa Itkonen, spokesperson for the European Commission. “Therefore, it is very, very difficult to peg any comments on one number that has been given from the U.S. side.”