Washington’s ambition to replace Russia as the dominant supplier of gas in Eastern Europe has encountered a surprising obstacle: it seems that potential European buyers do not want this. The Greek energy minister stated that tensions between the US and the EU have scared off potential buyers of American liquefied natural gas (LNG).
Two months ago, US government officials came to Athens to declare themselves the new major energy player in the Mediterranean region.
The plan was clear: new and modernized terminals in Greece would receive ships with American liquefied natural gas, which would then be transported to neighboring countries, from Bulgaria to Ukraine, through the pipeline network called the "Vertical Corridor." The goal was to replace "every molecule of Russian gas" with gas from the US, writes POLITICO.
"What we see for the future of Greece and the United States is for Greece to be an energy hub and to demonstrate this energy dominance that both countries can experience and collaborate on to achieve extraordinary results," said US Ambassador Kimberly Guilfoyle at that time.
However, when the Greek government called on energy companies to bid for access to these gas pipelines on Monday, the session was a failure. Energy companies showed almost zero interest, and analysts warned that President Donald Trump's unpredictable trade policy is undermining his own energy export ambitions.
The scale of the failure was striking. Out of the nearly 72 gigawatt-hours capacity offered to companies on three different entry routes, only 48 megawatt-hours were eventually reserved - less than 0.1% of the total offered. A similar auction in December was an even bigger failure as it did not attract any bids.
"Davos Effect"
Some blamed the embarrassing result on high transport costs and weak demand for gas in countries along the corridor.
Others, however, including the Greek government, cited the deteriorating EU-US relations, which have reached a historic low in recent weeks.
"The auctions did not go well at all, and this was the result of the conflict that has existed and still exists (between the EU and the US)," Greek Energy Minister Stavros Papastavrou said on local station Open TV on Tuesday.
If the auctions had gone well, gas traders would have shown confidence that the US would reliably deliver LNG and that there is strong demand for the new gas source in final markets. The weak outcome suggests that firms were not willing to take this bet.
"All these uncertainties introduced by Trump's position and his relationship with Europe and everyone seems to be somehow holding back to see how things evolve," said Charles Ellinas, senior fellow at the Atlantic Council's Global Energy Center.
"The initiative promoted by the US through Greece is important for the US, but for this to happen, the relationship between the US and Europe needs to become clearer. If Trump continues to be aggressive and do what he did at Davos, no one will want to invest, take or bring new initiatives until they know where things are heading," Ellinas said.
EU Escapes One Dependency and Acquires Another
Analysts warn that, in any case, the increasing dependence of the EU on LNG imports from the United States poses another significant geopolitical risk for the bloc.
"A serious challenge for the EU is that it seems to be replacing one dependency (Russia) with another (the US)," said Harry Tzimitras, director of the Peace Research Institute Oslo, Cyprus.
"Given the unpredictable, or even threatening, position of the US administration, this could be dangerous. The EU seems to be repeating past mistakes, seeking delayed alternatives to diversify its energy supplier base," he said.
The lack of interest was also attributed to the fact that alternative routes remain more competitive, with lower transit fees. Demand from Ukraine remains low as it prefers other routes, mainly through Poland and Lithuania. These routes include energy from the US but at a lower cost and without regulatory uncertainties.
Greece also blames the EU's ambiguous position, which has cut off Russian natural gas supplies without resolving regulatory issues to open new supply routes.
T.D.