EU to Explore Overseas LNG Investments to Slash Record High-Energy Prices

The European Commission said its Affordable Energy Action Plan will cut industrial and household bills by tens of billions of euros.

LNG tanker Flex Volunteer, sailing under the flag of the Marshall Islands, cruises near the Saint-Nazaire bridge over the Loire estuary, as it leaves the dock of the LNG Terminal of Montoir-de-Bretagne, near Saint-Nazaire, France, on April 12, 2022. Sebastien Salom-Gomis/AFP via Getty Images

The European Commission said in its Affordable Energy Action Plan, released on Feb. 26, that it is looking to invest in liquefied natural gas (LNG) projects abroad as part of its broader efforts to cut record-high energy prices, which threaten the EU’s “global standing and international competitiveness.”

“Our energy costs remain comparatively high, putting Europe at a real risk of deindustrialisation and posing a critical threat on our economy,” the commission said.

The European Union’s joint purchasing power should be harnessed by exploring “the option of longer-term contractual engagements to make prices more stable,” according to the commission’s plan.

The commission said that this could include schemes “whereby the EU and/or Member States could also accompany EU importers in investing directly in export infrastructure abroad, providing preferential loans to private investors” and by “securing gas liquefaction rights or purchase options.”

Currently, the EU signs short-term LNG contracts.

For industries, retail electricity prices have almost doubled, and for medium-sized industrial consumers, prices in 2023 remained 97 percent above their 2014–2020 average, according to the plan.

EU countries are locked into a legally binding target to create a “climate-neutral economy” with net-zero greenhouse gas emissions by 2050.

Other proposals in the plan include speeding up permits for renewable energy projects and accelerating the roll-out of smart meters.

By “accelerating investments in clean energy and infrastructure,” the EU can make energy affordable, the commission stated.

It said that these measures could cut the EU’s bill for imported oil and gas by 45 billion euros ($47 billion) this year and save 130 billion euros ($136 billion) per year by 2030.

The commission said that it will also assess “the possibility of streamlining current permitting and licensing practices for the deployment of new nuclear energy technologies such as Small Modular Reactors.”

Relocating

Some energy-intensive industries in Europe are relocating production to the United States, where energy prices are lower.

According to a poll conducted by Germany’s DIHK Chambers of Industry and Commerce last year, chunks of the country’s businesses, which is the major industrial force of the European Union, are considering long-lasting changes because of high energy prices.

The survey, which involved more than 3,300 companies, found that 37 percent were considering cutting production or moving abroad.

That percentage increased when it came to energy-intensive industrial companies. For those companies, 45 percent were mulling slashing output or relocating. When it came to companies with more than 500 employees, such as those involved in mechanical engineering and the production of industrial goods, 51 percent considered such changes.

Commenting on the poll at the time, DIHK Deputy Chief Executive Achim Dercks said, “While in the years before 2023, many companies also saw opportunities in the energy transition for their own operations, in their view, the risks have recently clearly outweighed the benefits.”

Record-Setting

Europe is increasingly turning to LNG after pipeline supplies from Russia via Ukraine ended in early January.

On Jan. 1, a major contract that allowed gas to transit through Ukraine from Russia expired after Ukraine’s state-owned company Naftogaz chose not to renew it.

LNG, which is transported by sea in specialized tankers, has become an increasingly important part of Europe’s energy supply.

Major ports in France, Belgium, and Spain receive liquefied natural gas shipments, which are then converted back into gas and distributed across the continent.

This trend is likely to continue as part of President Donald Trump’s push for more U.S. domestic drilling and increased exports of LNG to Europe.

According to a Feb. 25 analysis by Reuters, Europe began the year with record-setting LNG imports.

January and February ranked as the third- and fourth-highest months ever for total LNG imports.

When measured on a per-day basis, February’s LNG imports are set to become the second-highest since April 2023.

About 11.84 million metric tons were imported in January. February’s total imports are expected to reach about 11.81 million metric tons.

Reuters contributed to this report.