Trump Says Europe Will Buy More American Gas. Is That Possible?

Buying gas from the U.S. has its advantages

To start, just having the possibility of importing large amounts of L.N.G. from the United States, or indeed elsewhere, eases the risk that Russia could apply a gas chokehold on Europe. (Germany, for example, imports around half of its natural gas from Russia.) Poland and Lithuania, which are especially wary of Moscow, have recently built L.N.G. receiving terminals for this reason.

Still, Europe’s dependence on Russia is driven largely by one factor — Russian gas is cheap.

European gas prices are now largely determined by trading on financial markets, but they are often too low for American suppliers to compete. The cost of liquefying gas in the United States and transporting it to Europe doubles its price for American companies. So if they were to sell to customers in Europe at current prices, they would lose money.

By contrast, Russian gas sent by pipeline to Germany costs far less, allowing Russian companies to make large profits, according to Jonathan Stern, founder of the natural gas program at the Oxford Institute for Energy Studies.

There is also another benefit: Buying more gas from the United States could give Mr. Trump a reason to hold off on imposing costly tariffs on auto imports. Giles Farrer, an analyst at the energy consultancy Wood Mackenzie, points out that the president has tried to use gas to improve the United States’ trade balance in talks with Europe and China.

So what’s stopping Europe?

Cost is a major factor.

Europe has pushed hard in the past two decades to create a freely traded market for natural gas, according to Mr. Alvera of SNAM. The region has, in essence, bet that a functioning market is the best route to easing dependence on any one source.

While American gas exports have grown rapidly, most shipments have gone to Asia and Latin America, where prices have been higher. Price differences mean American gas is usually attractive to European buyers only during cold snaps, when prices on the Continent rise. If a glut of L.N.G. emerges in the future, more of that gas from the United States may wind up in Europe, but that could mean American suppliers lose money, Mr. Stern said.

Capacity is another issue

The United States became a natural gas exporter only recently, as a result of large quantities of the fuel becoming available from shale drilling. As a result, the country has yet to construct the export terminals necessary to sell its gas to customers further afield. The United States is expected to add substantially to this export capacity in the next few years, though.

“It makes a lot of sense for U.S. L.N.G. to fill the gap,” said Oswald Clint, an analyst at Bernstein Research.