EU trade deal with Trump seen as helping Europe ditch Russian fuels
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The new trade deal that President Trump unveiled with the European Union includes a European pledge to buy $750 billion worth of U.S. energy.
Why it matters: European Commission President Ursula von der Leyen said it will help the bloc further wean itself off Russian gas.
- The $750 billion is spread across three years, she told reporters in Scotland on Sunday.
The big picture: "We still have too much Russian LNG that is coming through the back door ... to our European Union," von der Leyen said, and she also cited some continued oil shipments.
- "We want to absolutely get rid of Russian fossil fuels, and therefore it is much welcome to purchase the more affordable and better LNG from the United States," she said.
- EU pipeline imports of gas from Russia, once its dominant supplier, have fallen greatly. But imports of Russian LNG remain substantial.
What we're watching: EU members' purchases of U.S. LNG and oil have risen sharply since Russia invaded Ukraine.
- And European energy companies have already been signing deals for future LNG volumes from U.S. projects that are planned or already under construction.
The bottom line: Details are lacking about how to translate such a large pledged import increase into reality.
- ClearView Energy Partners, in a note, said that even if the $250B annually includes existing U.S. energy exports to the EU of roughly $78B per year, it would still be a big jump.
- The total "would far outstrip" U.S. energy purchases in Trump's "phase one" deal with China, ClearView said.
- "Even if the total were inclusive of existing purchases, it would still represent nearly ~$175 B/Y of additional energy goods exports by value (not counting biofuels, petrochemicals and uranium)," it added.
