U.S., Europe Closing In on Deal to Cut Demand for Russian Energy

(Bloomberg) — The Biden administration and European Union are close to a deal aimed at slashing Europe’s dependence on Russian energy sources, as the U.S. and its allies seek to further isolate and punish Moscow for the Ukraine war.

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President Joe Biden’s national security adviser, Jake Sullivan, said that an agreement would be announced as soon as Friday. It’s intended to ensure supplies of American natural gas and hydrogen for Europe, according to an official familiar with the plans.

“A major priority for both the president and his European allies is to reduce the dependence of Europe on Russian gas, full stop, and the practical road map for how to do that — what steps have to be taken, what the United States can contribute, what Europe has to do itself,” Sullivan told reporters aboard Air Force One on Wednesday.

“This has been the subject of intense back-and-forth over the course of the past few days and weeks,” Sullivan said, “and we will have more to say on this subject, specifically on Friday.”

He suggested the focus would be on diversifying European supplies of natural gas. “You can expect that the U.S. will look for ways to increase LNG supplies, surge LNG supplies to Europe, not just over the course of years, but over the course of months as well,” he said, using an acronym for liquefied natural gas.

Biden is traveling to Brussels for meetings on the Ukraine war with NATO, Group of Seven and European Union leaders including European Commission President Ursula von der Leyen. He’ll travel to Poland on Friday to show U.S. support for NATO allies closest to Russia.

Von der Leyen said in a tweet that the goal is commitments for additional supplies for the next two winters.

It’s unlikely the U.S. will guarantee specific amounts of gas supplies to the EU, the official familiar with the plan said, and it’s unclear how the arrangement would work or whether it would include an agreement on pricing.

The official asked not to be identified because the agreement isn’t final. Currently, European buyers compete with Asian countries for the world’s limited supply of liquefied natural gas cargoes.

Ahead of Biden’s trip, Treasury Secretary Janet Yellen, Sullivan and National Economic Council Director Brian Deese met this week with Exxon Mobil Corp. Chief Executive Officer Darren Woods, senior officials from energy companies such as Marathon Petroleum Corp., and leaders of other major corporations including JPMorgan Chase CEO Jamie Dimon.

Dimon recommended the White House develop what he called a “Marshall Plan” to increase U.S. natural gas production and reduce development time for renewable energy production such as wind farms, according to people familiar with the discussion.

The group also discussed how prepared U.S. oil and gas producers were to ramp up production, one person said. A second person said the officials and executives discussed the possibility of making up for production shortfalls if the EU ultimately decides to join the U.S. in banning imports of Russian crude.

The people asked not to be identified because the meeting was private.

Russia is the EU’s biggest natural gas supplier, accounting for more than 40% of imports. The EU, which also relies on the country for the biggest share of its coal and oil import needs, is struggling to shift its energy policy away from Russia.

The European Commission on Wednesday adopted a draft regulation that requires countries to ensure that gas storage is filled to 80% before next winter and 90% in following years. The commission, the bloc’s executive arm, also called for joint purchases of gas by member states to help secure the best conditions.