Exclusive: US talks with energy companies over EU gas supplies in case of Russia-Ukraine conflict

Exclusive: US talks with energy companies over EU gas supplies in case of Russia-Ukraine conflict

A view shows pipelines at a gas processing facility operated by Gazprom in the Povanenkovo ​​gas field in the Arctic Yamal Peninsula, Russia, May 21, 2019. Photo taken May 21, 2019. REUTERS/Maxim Shemetov

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LONDON/WASHINGTON, Jan 14 (Reuters) – The U.S. government has held talks with several international energy companies about contingency plans to supply Europe with natural gas if the conflict between Russia and Ukraine disrupts Russian supplies, two U.S. officials and two industry sources told Reuters on Friday. .

The United States is concerned that Russia is preparing for the possibility of a new military attack on the country it invaded in 2014. Russia denies it plans to attack Ukraine. Read more

The European Union depends on Russia for nearly a third of its gas supplies, and US sanctions over any conflict could disrupt that supply.

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Any disruption to Russian gas supplies to Europe would exacerbate the energy crisis caused by fuel shortages. Record energy prices have driven up consumer energy bills as well as business costs and sparked protests in some countries.

Two industry sources familiar with the discussions told Reuters on condition of anonymity due to the sensitivity of the matter, that State Department officials contacted the two companies to ask where the extra supplies might come from if they were needed.

Industry sources said the companies told US government officials that global gas supplies are tight and that there is little gas available to replace large volumes from Russia.

A senior US State Department official, who spoke on condition of anonymity, said the State Department’s discussions with energy companies were led by energy security adviser Amos Hochstein. The official added that the Ministry of Foreign Affairs did not ask companies to increase production.

The source said: “We discussed a range of emergency situations and talked about everything we are doing with our partners and allies from countries.”

“We’ve done that with the European Commission, but we’ve also done it with the energy companies. It’s accurate to say that we spoke to them about our concerns and we spoke to them about a range of contingencies, but there weren’t ‘any kind of questions when it came to production.'”

In addition to asking companies what capacity they have to increase supplies, the sources said, US officials also asked if they had the ability to increase exports and delay field maintenance if needed.

It was not clear which companies the US officials contacted. Royal Dutch Shell (RDSa.L), ConocoPhillips and Exxon (XOM.N) declined to comment when asked if they had been contacted. Chevron Corp. (CVX.N), Total, Equinor (EQNR.OL) and Qatar Energy did not immediately respond to a request for comment.

A second industry source said his company had been asked if it had the ability to delay maintenance at the gas fields if necessary.

A spokesman for the US National Security Council would not comment on US discussions with energy companies, but confirmed that contingency planning was underway.

“Assessing potential ramifications and exploring ways to mitigate those ramifications is good judgment and standard practice,” the spokesperson said.

“Any details in this regard that make their way to the public only show the broad and serious details that we are discussing and are ready to impose significant measures with our allies and partners.”

Moscow has alarmed the West by massing its forces near Ukraine in the past two months, after its 2014 seizure of Ukraine’s Crimea peninsula and its support for separatists fighting Kiev’s forces in eastern Ukraine.

Biden had earlier told Russian President Vladimir Putin that a new Russian move on Ukraine would lead to sanctions and an increase in the US presence in Europe.

Russia denies planning to attack Ukraine and says it has the right to move its forces on its soil at will.

“The United States promised to support Europe if there is an energy shortage due to conflict or sanctions,” the second industry source said.

“Amos is going to the major LNG producing companies and countries like Qatar to see if they can help the United States,” he added, referring to Hochstein.

If pipeline supplies from Russia to Europe are reduced, European buyers will need to have shipments of ultra-cooled gas to compensate.

US LNG exports are set to rise this year to become the world’s largest supplier of LNG. Europe is competing for LNG supplies from suppliers such as the United States and Qatar with major consumers China and Japan, which are also facing an energy crisis.

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Additional reporting by Garrett Renshaw, Michelle Nichols and Gary McWilliams. Editing by Richard Waldmanis, Simon Webb and Daniel Wallis

Our Standards: Thomson Reuters Trust Principles.

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