BRUSSELS — The European Union (EU) is set to reduce its natural gas purchase targets, even as U.S. President Donald Trump asserts that increasing gas purchases is essential to resolving his ongoing trade war.
On Tuesday, EU member states advanced plans to relax mandatory targets for refilling storage facilities ahead of winter, aiming to lower supply costs, according to four diplomats who spoke with POLITICO.
This decision defies White House demands for the EU to invest an enormous $350 billion more on American gas to address a perceived trade imbalance. Trump has previously issued such demands only to essentially ignore European attempts at negotiation and impose tariffs regardless. These tariffs contribute to the economic pressures pushing Europe to seek energy cost reductions.
Seven countries — France, Germany, Italy, Austria, Hungary, Slovakia, and the Netherlands — spearheaded the initiative to lower gas purchase targets, proposing a reduction from a 90-percent storage capacity goal to 80 percent under specific circumstances. They argue that the higher target forces the EU to secure large quantities of gas, primarily from the U.S., at peak prices.
“In these turbulent times and [amid the] ongoing fight for competitiveness, it would be a better solution [to have greater flexibility] than to adhere strictly to the current targets,” stated Lithuanian Energy Minister Žygimantas Vaičiūnas in an interview.
Lower industrial demand could potentially result from Trump’s tariffs, he noted, making it increasingly difficult for the EU to procure more U.S. LNG.
Energy Frenemies
Europe began relying more heavily on American LNG three years ago following Russia’s invasion of Ukraine, which significantly disrupted gas supplies to the continent. Since then, U.S. gas has become vital for the EU.
This dependency is expected to intensify in the upcoming months as the EU seeks to eliminate its remaining ties to Russian energy and substitute the gas that traditionally flowed through Ukraine.
“The EU will need to acquire more American gas to compensate for the loss of Russian supplies,” explained Laura Page, a leading market analyst at intelligence firm Kpler. “Reducing the storage target will alleviate pressure on Europe’s gas imports this summer, positively impacting prices — resulting in a better deal for the EU.”
According to Kpler data, with the current refilling rate, EU storage facilities are projected to reach only 78 percent of capacity by winter. To attain the 90 percent target, the EU would need to overpay for gas in the coming months, Page emphasized.
Trump’s tariffs are also raising concerns about industrial decline, as EU exporters face a 20 percent levy on all goods shipped to the U.S.
Decreased industrial activity implies reduced fuel needs. A new analysis from intelligence firm ICIS forecasts a 3.6 percent decline in gas demand this year, alongside a 3.5 percent drop in prices.
According to Andreas Schroeder, head of energy analytics at ICIS, the new U.S. tariffs could approach “Great Depression levels.”
Schroeder also noted that these tariffs will have extensive, long-term implications for European energy markets. A subsequent decline in industrial demand is likely to reduce “spot LNG deliveries into Europe,” resulting in less business for American producers.
Despite ongoing talks held by EU officials in Washington in recent weeks to negotiate a deal for increased LNG purchases, these discussions have not yielded any positive outcomes. Sources indicate that diplomats have expressed frustration over U.S. officials’ lack of interest in negotiations, even with concrete proposals for increased gas purchases.
Trump’s demand for a $350 billion energy purchase, issued late Monday, far exceeds any realistic negotiating position. Purchasing that amount of gas would equate to nearly 16 million barrels per day — exceeding America’s total daily output of approximately 13 million barrels.
“Regarding the $350 billion, what is crucial is that energy contracts are based on demand and price, which fluctuate,” remarked Anna-Kaisa Itkonen, spokesperson for the European Commission. “Consequently, it is very challenging to anchor any comments to a specific figure provided by the U.S. side.”
