Could US Oil and Gas Exports Be a Game Changer for EU Energy Security?

Analyse approfondie 08-02-2016

The quest for oil markets abroad can be seen as an attempt by US companies to find higher prices and profits and avoid bankruptcy, since the current low price of oil, resulting from OPEC's strategy of oversupplying the market, is making shale-oil production in the US less and less profitable. The impact of potential US oil exports on the European Union's energy security is expected to be limited in the short term. The oil market is oversupplied, prices are depressed and are only expected to increase slightly if OPEC and other producers agree to stabilise production, and Europe can find alternative suppliers easily. These now include Iran, which has the world's fourth-largest reserves of oil, since sanctions were lifted in January following the nuclear deal. The US ban on natural gas exports is still in force. Should it be removed, as part of a TTIP deal or under changes to domestic law, the US has the potential to become a net gas exporter. However, as the US can get higher prices on Asian markets and as both the US and the EU have limited LNG infrastructures, the EU is an unlikely destination for large LNG imports from the US in the short run. Europe can obtain gas from a plethora of suppliers, now including Iran, which has the world's second-largest reserves of gas. The long-term outlook is more promising, as US LNG export capacities are expected to rise significantly in the coming decade and EU Member States may decide to diversify supplier countries and routes, under the European Energy Security Strategy, rather than allowing short-term commercial interests to prevail.