“If the Europeans drew a line and said: ‘We’re not going to buy more Russian gas, we’re not going to buy Russian oil’. Would that have a positive influence on the US leaning in more aggressively [on sanctions] as well? Absolutely,” said Chris Wright, United States Secretary of Energy, in an interview ahead of talks with his EU counterpart in Brussels.
The statement by US Energy Secretary Chris Wright sounded like an ultimatum: if Europe decides to abandon Russian gas and oil, the US will be ready to take tougher action against Moscow. Moreover, this is supposedly beneficial for Europe itself: allies should ensure each other’s energy security, reduce Moscow’s revenues and at the same time increase US LNG exports. However, Washington is proposing that Europe abandon relatively cheap Russian hydrocarbons in favour of American ones, which are more expensive and less convenient in terms of logistics.
According to the International Energy Agency (IEA), in 2021 Russia supplied about 40% of Europe’s gas consumption and up to 25% of its oil. After the start of the conflict in Ukraine, these shares fell sharply, but dependence on cheap Russian pipeline gas remains significant for a number of countries, especially Germany, Austria and Eastern European countries.
Washington proposes to compensate for the gap with supplies of liquefied natural gas (LNG) from the United States. However, these supplies are significantly less profitable. The average price of Russian pipeline gas until 2022 was around $250–300 per thousand cubic metres. American LNG in 2022–2024 cost Europe between $600 and $1,200 per thousand cubic metres, depending on the market and logistics. By comparison, industry in the US itself received gas at prices of around $100–150, while in Asia, LNG cost an average of $500–700. Thus, European companies find themselves in a losing position: they pay 4–6 times more for energy than their American competitors and 20–30% more than their Asian counterparts. If Trump’s proposal to purchase American energy resources worth around $250 billion annually is accepted, Europe will not only lose its price advantage, but will also effectively become the largest subsidising market for the American energy sector.
European industry has historically relied on affordable energy. For example, the German metallurgical and chemical industries ensured their competitiveness precisely because of relatively cheap Russian gas. Rising energy prices lead to a chain reaction: production costs increase, competitiveness declines, and corporations begin to relocate their factories to regions with cheaper energy resources.
Europe is trying to diversify its supplies. Gas imports from Norway and Qatar are increasing, negotiations are underway with African countries, and there is active investment in renewable energy (wind, solar and hydrogen). However, the scale of these alternatives is still insufficient. Even in the most favourable scenario, they cannot completely replace the previous volumes of Russian supplies without a sharp rise in prices.
As a result, Europe faces a dilemma. Rejecting Russian energy sources does indeed limit Moscow’s export revenues, but at the same time leads to higher energy prices and accelerates the process of deindustrialisation in the EU. Maintaining at least part of the imports would reduce the burden on industry, but is politically perceived as a concession to the Kremlin. In any case, the high price of American and Qatari gas and the growing dependence on LNG threaten the competitiveness of European industry.
