"The EU is committed to phasing out energy imports from Russia and diversifying our sources of supply," a spokesperson said.
U.S. President-elect Donald Trump said on Friday the European Union should step up U.S. oil and gas imports or face tariffs on the bloc's exports that include goods such as cars and machinery. The EU already buys the lion's share of U.S. oil and gas exports, according to U.S. government data. No extra volumes are currently available as the United States is exporting at capacity, but Trump has pledged to further grow the country's oil and gas production.
"I told the European Union that they must make up their tremendous deficit with the United States by the large-scale purchase of our oil and gas," Trump said in a post, opens new tab on Truth Social.
"Otherwise, it is TARIFFS all the way!!!," he added.
The European Commission said it was ready to discuss with Trump how to strengthen what it described as an already strong relationship, including in the energy sector.
The United States already supplied 47% of the European Union's liquefied natural gas imports and 17% of its oil imports in the first quarter of 2024, according to data from EU statistics office Eurostat.
TARIFF THREATS
Trump, who takes office on Jan. 20, has vowed to impose tariffs of 10% on global imports into the U.S. along with a 60% tariff on Chinese goods - duties that trade experts say would upend trade flows, raise costs and draw retaliation against U.S. exports.
The U.S. ran a $208.7-billion goods trade deficit with the EU in 2023, according to U.S. Census Bureau data. Although the U.S. runs a surplus with the EU on services, Trump has focused mainly on goods trade, frequently complaining about the bloc's car exports to the U.S. with few vehicles shipped east across the Atlantic.
German and Italian car exports currently face a 2.5% U.S. tariff, which could quadruple if Trump makes good on his threats.
Trump has also vowed to authorize hefty tariffs on the top three U.S. trading partners, Mexico, Canada and China, on his first day in office if they fail to stem illegal border crossings into the U.S. and trafficking of the deadly opioid fentanyl.
William Reinsch, a trade expert at the Center for Strategic and International Studies, said the EU could negotiate its way out of Trump's tariffs.
"This could be a win-win, telling them to buy something they want and need anyway," Reinsch said.
However, most European oil refiners and gas firms are private and governments have little say on where their purchases come from unless authorities impose sanctions or tariffs. The owners usually buy their resources based on price and efficiencies.
The U.S. is already producing and exporting record volumes of oil and gas and increasing those would require significant investment, especially for LNG export terminals.
Reinsch noted that while there is demand in Europe now for U.S. oil and gas to replace shunned Russian supplies, long-term demand is unclear with the transition to renewable energy sources. Companies will be reluctant to invest if they think current demand is transitory, Reinsch said.
BUYING MORE U.S. ENERGY
The EU has steeply increased purchases of U.S. oil and gas following the block's decision to impose sanctions and cut reliance on Russian energy after Moscow invaded Ukraine in 2022.
The United States has grown to become the largest oil producer in recent years with output of over 20 million barrels per day of oil liquids, or a fifth of global demand.
U.S. crude exports to Europe stand at around 2 million bpd, representing over half of U.S. total exports, with the rest going to Asia.
The Netherlands, Spain, France, Germany, Italy, Denmark, and Sweden are the biggest importers, according to the U.S. government data.
"Europe is taking close to its maximum capacity for U.S. crude, meaning there is little scope for stronger imports next year," said Richard Price, oil markets analyst at Energy Aspects. He also said refinery closures in Europe in 2025 won't help increase imports.
The United States is also the world's biggest gas producer and consumer with output of over 103 billion cubic feet per day.
The U.S. government projects that U.S. LNG exports will average 12 bcfd in 2024. In 2023, Europe accounted for 66% of U.S. LNG exports, with the UK, France, Spain and Germany being the main destinations.
U.S. oil production growth will likely be slow until 2030, according to the International Energy Agency.
Gas output could meanwhile rise further to meet record U.S. domestic demand and LNG exports could also increase if the government approves more LNG terminals.
The EU imported around 2 bcfd of Russian LNG in 2024 and it could move to ban those supplies and seek replacement from other sources, said Alex Froley, LNG analyst at ICIS.
(Reuters, December 20, 2024)
