Former Fellow
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As Russian forces invaded Ukraine in the early winter of 2022, it seemed Europe’s dependence on natural gas from Russia might leave Europe with a stark choice: capitulate and accept Russia’s aggression or suffer a potentially catastrophic energy shortage with dire economic, political and social consequences. Fortunately, a concerted action by the United States and its allies produced an LNG “GasLift” that flooded European terminals and succeeded in pulling Europe through the winter of 2022. But launching a winter 2023 GasLift that will supply sufficient energy to Europe could prove considerably more challenging given further Russian gas reductions, unexpected LNG facility outages, and possible domestic export restrictions in some countries.
The gathering storm in Asia further heightens Europe’s gas insecurity. Russia took advantage of extremely tight markets and uncertainty by nationalizing the Sakhalin II LNG plant just days after outages at major LNG plants in the U.S. and Australia, challenging the gas security of U.S. allies in Asia, particularly Japan and South Korea. Compounding matters, China’s “live-fire” military exercises in the Taiwan Strait effectively blockaded Taiwan’s two LNG import terminals, signaling future energy insecurity for the island.
With conflict on two fronts, and natural gas squarely in the crosshairs, the U.S. LNG industry will be needed to maintain commitments and support allies and trading partners in both Europe and Asia this winter. Unity and resolve among allies and partners, as well as tolerance for some domestic sacrifices, will be necessary to ensure a level of energy security on both fronts. Weather, war, and the whims of black swan risk factors could coincide to yield the most challenging winter for energy markets seen in decades. Maximizing molecule flows into the global gas market is a distinct U.S. national security interest.
