Energy experts are tearing apart the deal that the European Union struck with the United States on Sunday. Europe must purchase a total of 750 billion dollars worth of oil and gas from the US over the next three years. But they think that amount is completely unattainable.
Within the energy sector, many will have fallen off their chairs when details of the American-Brussels agreement came out. The EU must spend 250 billion dollars (almost 219 billion euros) annually on oil and gas from the US over the next three years. At least, that is the intention.
But market watchers agree that that will never happen. “The amount of 250 billion is really absurd. That is simply not possible,” says gas expert Jilles van den Beukel of research institute HCSS.
“As Europe, we import roughly 70 to 80 billion euros worth of energy from the US annually. That could perhaps grow to 100 billion in the coming years, but that’s it.”
Van den Beukel also points out that energy is not bought by the EU or the member states, but by commercial companies such as Shell, Total, or Trafigura. They mainly look at the price and not at agreements that governments make with each other.
“We don’t need 250 billion euros worth of energy at all,” says energy expert Martien Visser. “In addition, we produce some natural gas ourselves and we get a lot from Norway.”
‘The market goes its own way’
When it comes to gas, Europe mainly buys a lot of liquefied natural gas (LNG) in the US. “If I look realistically at what we need in Europe in terms of LNG, you end up at perhaps 25 billion dollars per year,” says Visser. “You would then have to spend the remaining 225 billion dollars from the deal on oil. You will never achieve that in practice, also because we are using less and less fossil energy.”
Another factor is that the Americans are also making agreements with other countries about the purchase of energy. “Then it becomes very difficult for the US to meet all that demand,” says Visser, who also points out that market parties decide where they buy. “The market goes its own way.”
Although the agreed amounts are not feasible, the importance of the US as an energy supplier seems to be increasing in the coming years. For example, in the first quarter of this year, EU countries obtained more than half (50.7 percent) of their liquefied natural gas from the US. The Americans are also the most important source for oil, with a share of 15 percent.
Deal makes EU even more dependent on US
There is concern that dependence on the Americans will become as great as in defense. In that area, Europe has long relied on security guarantees from the US and has partly neglected its own armed forces. But under President Donald Trump, those American guarantees are less certain.
As a result, Europe suddenly has to allocate hundreds of billions to get its own security in order. “We must be careful not to do the same with energy,” says Gerben-Jan Gerbrandy, Member of the European Parliament for D66.
“We have partly done the dependence in the energy field ourselves, because we wanted to get rid of Russian gas. You have to get that from somewhere else and the alternatives are scarce. If one tap closes, the other must open.”
But for the longer term, Gerbrandy argues for large investments in European energy production. “Otherwise you will remain very dependent.”
NSC and CDA also agree. “Because then you will be stronger at the negotiating tables in the future,” says CDA MEP Tom Berendsen. “Ideally, you want to spend the money in Europe, of course. But that doesn’t work with everything. We don’t have LNG ourselves, so we have to import it.”