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US in talks with Qatar over gas supplies to Europe in event of Ukraine invasion


The US is holding discussions with Qatar and other large gas exporters to plan contingency measures in case a Russian invasion of Ukraine disrupts supplies to Europe.

The talks with Qatar and EU member states, focused on securing additional seaborne liquefied natural gas cargoes, have gained urgency after high-level security negotiations between Washington and Moscow this week yielded minimal progress.

This has increased concerns of conflict that could hit gas supplies at a time when Europe is already facing record prices. However, officials warned that there was no “magic wand” to solve the potential shortfall with the continent already in the grip of an energy crisis.

“We’re looking at what can be done in preparation for an event, especially midwinter with very low [European natural gas] supplies in storage,” a senior US administration official said.

“We discussed what can be moved around the market, what can help . . . the things we can prepare now for deployment if and when there is an escalated crisis”.

Tensions between the west and Russia have soared as Moscow has deployed about 100,000 troops on the Ukrainian border. The US has threatened severe sanctions against Russia if it invades, while some energy officials have accused the Kremlin of already leveraging its gas exports.

Fatih Birol, head of the International Energy Agency, said last week that Russia was throttling gas supplies to Europe at a time of “heightened geopolitical tensions”.

There are fears that conflict could lead to a further drop in gas supplies to Europe, which is facing a growing cost of living crisis and rising inflation as gas prices have soared. With gas stocks at record low levels for the time of year, officials fear Europe could face industrial disruption, rolling blackouts, or even a loss of heating supplies if Russian exports fall sharply following an invasion.

The senior official in the Joe Biden administration acknowledged that existing contracts between LNG exporters and Asian buyers could complicate efforts to divert supplies to Europe.

“There’s no magic wand,” the official said. “It’s all really hard, really complicated. Looking to do it within the constructs of how markets work, how commercial terms work, how cargoes work.”

The official added it had become increasingly clear that Russia has been squeezing gas supplies in recent months in order to gain leverage over European capitals.

“This is not a market situation we’re dealing with. These are not market forces. These are manipulated markets,” the official said.

Europe’s reliance on Russian gas has complicated efforts to present a united front against Moscow’s threats.

While most observers expect Russia to avoid completely cutting exports, there are concerns Moscow could still squeeze supplies further, or that gas export infrastructure in Ukraine could be damaged by conflict.

Energy executives have also cautioned about the potential effect of US sanctions after Biden this week said punitive measures could include stopping Russian banks from dealing in US dollars — the main currency of the global commodities trade.

One energy industry executive said that Europe would almost certainly face extremely high prices in the event of a disruption that may require co-ordinated government action to source seaborne LNG cargoes.

“They will effectively have to compete for all the supply in the market, taking cargoes away from Asia, and the likely end result is the taxpayer will pay,” the energy executive said.

“It would be like procuring PPE at the start of the pandemic, with governments needing to intervene.” 



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