Caixin Finance April 14th, Editor Xiao Xiang) When "trade war" replaced "the Russia-Ukraine conflict" as the focus of the world, Europe, which used to claim three years ago that it could not depend on Russian gas, now seems to be quietly undergoing a 180-degree change in attitude:

Many European enterprises are beginning to worry that dependence on America has become a new weakness, and buying Russian gas again seems to have become a more reasonable option under the current situation!

Yes, even if any "screenwriter" imagined the most imaginative scenarios three years ago in the Russia-Ukraine crisis... they probably couldn't write such a dramatic "script"...

European executives want to buy Russian gas

In fact, despite the fact that more than three years have passed since the outbreak of the Russia-Ukraine conflict, Europe's energy security remains fragile.

During the 2022-2023 energy crisis, American liquefied natural gas (LNG) helped fill some of the supply gap caused by the withdrawal of Russian gas to a certain extent. However, with former U.S. President Donald Trump shaking up the post-WWII relationship between Europe and America and using energy as a trade negotiation chip, European enterprises began to worry that dependence on America had become a new vulnerability.

In this context, many senior executives of large EU enterprises have recently made remarks that would have been unimaginable a year ago: importing part of the Russian gas from state-owned energy giant Gazprom might be a wise move.

This proposal means that Europe needs to make significant policy shifts, as the Russia-Ukraine conflict that erupted in 2022 prompted the EU to commit to stopping the import of Russian energy by 2027.

However, Europe's options are already extremely limited: negotiations with Qatar, a major LNG supplier, to expand supplies have stalled; although renewable energy deployment is accelerating, it is still insufficient to make the EU feel secure.

Didier Holleaux, executive vice president of French energy group Engie, told the media that if peace is achieved in Ukraine, the annual supply of Russian gas may recover to 60-70 billion cubic meters (including LNG).

The French government owns part of Engie's shares, and the company was once one of Gazprom's largest customers. Holleaux said that Russian gas might meet 20-25% of the EU's demand in the future, lower than the pre-war 40% share.

Patrick Pouyanne, CEO of French energy giant TotalEnergies, warned Europe against over-reliance on American gas. He emphasized during an interview that diversification of supply channels must be achieved to avoid excessive dependence on one or two sources. Pouyanne estimated that "Europe may not return to the pre-war level of 150 billion cubic meters of Russian gas imports, but it may rise to around 70 billion cubic meters."

German citizens support it

It is worth noting that due to France's large nuclear energy capacity, it is one of the most diversified energy suppliers in Europe. And Germany, which relied heavily on cheap Russian gas to drive its manufacturing industry before the Russia-Ukraine conflict, undoubtedly has fewer choices now...

Leuna Chemical Park, located in eastern Germany, is one of the largest chemical parks in the country, with factories built by Dow Chemical and Shell. Previously, Nord Stream pipelines (destroyed in 2022) met 60% of the park's energy demands. Christof Guenther, general manager of InfraLeuna, the park operator, stated, "We are in a severe crisis and cannot wait any longer."

He pointed out that the German chemical industry has cut jobs for five consecutive quarters, something that has never happened in the past few decades. "Reopening the Russian gas pipeline will lower prices more effectively than any subsidy program at present."

"This is a taboo topic," Guenther added, but many of his colleagues believe that it is necessary to resume the use of Russian gas.

In the federal election held in February, nearly one-third of Germans voted for parties friendly to Russia. In Mecklenburg-Vorpommern (where the Nord Stream pipeline lands after crossing the Baltic Sea from Russia), 49% of local residents hope to restore Russian gas supplies.

"We need Russian gas, we need cheap energy - no matter where it comes from," Klaus Paur, general manager of Leuna-Harze, a medium-sized petrochemical manufacturer located in the Leuna park, said. "We need Nord Stream 2 because we must control energy costs."

Daniel Keller, economic minister of Brandenburg, said that the industry hopes the federal government can find cheap energy. Brandenburg is home to Schwedt refinery, co-owned by Rosneft and managed by the German government. Keller said, "We can imagine that after peace is achieved in Ukraine, Russian oil imports or transportation may resume."

America is no longer reliable

According to statistics, last year, American gas accounted for 16.7% of the EU's gas imports, second only to Norway's 33.6% and Russia's 18.8%. Considering that the Russia-Ukraine transit pipeline closed at the beginning of this year, Russia's share may fall below 10% this year - the remaining mainly consists of liquefied natural gas exported by Novatek.

Last week, EU Trade Commissioner Maros Sefcovic stated that it is certain that we will need more liquefied natural gas.

Currently, due to Trump's desire for Europe to reduce its trade surplus with America, purchasing more American liquefied natural gas is indeed one of the options that the EU might try to appease the White House. However, Tatiana Mitrova, a researcher at Columbia University's Center for Global Energy Policy, said that the tariff war has also greatly exacerbated Europe's concerns about dependence on American gas.

Mitrova added, "It is becoming increasingly difficult to view American liquefied natural gas as a neutral commodity: in a sense, it may become a geopolitical tool."

Arne Lohmann Rasmussen, chief analyst at Global Risk Management, also said that if the trade war escalates, there is a small risk that the United States may limit LNG exports.

An anonymous senior EU diplomat also agreed with this. He pointed out that no one can rule out the possibility of the Trump administration "using this lever."

Warren Patterson, head of commodities strategy at ING Group, said that if domestic natural gas prices in the United States rise due to increased industrial and artificial intelligence demand, the United States may reduce exports to all markets.

Anyway, under Trump's leadership, America is clearly "no longer reliable," and Europe is destined to need to prepare for "double contingency" in advance...

(Caixin Finance, Xiao Xiang)

Original source: https://www.toutiao.com/article/7493072744800600587/

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