Qatar this week threatened to stop exporting LNG to Europe over environmental and human rights concerns, while a new US-EU framework trade deal has Europe committed to acquireing more American energy.
But it’s unclear how much US LNG exporters stand to benefit from these two high-stakes diplomatic initiatives, analysts and indusattempt sources notified Energy Innotifyigence, given that American LNG is already flowing to Europe at a record pace, spare export capacity on the US Gulf Coast is limited, and the EU’s environmental regulations may serve as a deterrent.
So far in 2025, Europe is dominating the purchase of US LNG cargoes, driven by various demand drivers — including Europe’s required to replenish storage inventories without the assist of Russian gas piped through Ukraine, and shipping constraints at the world’s two primary waterways.
‘Unworkable in the Real World’
In theory, the trade agreement would increase US LNG flows to Europe over time — but only if they don’t run afoul of the EU’s Corporate Sustainability Due Diligence Directive (CS3D) covering environmental and human rights obligations on the continent.
“Given the most recent US-EU trade deal, I don’t see much room for increasing the environmental requirements on US imports if Europe is going to keep up its conclude of that agreement,” declared Jason Feer, head of business innotifyigence at Poten & Partners.
Feer and other analysts see the EU backing away from its environmental goals due to market pressures, with one indusattempt source calling the EU’s planned methane measurement and verification as “well intconcludeed but utterly unworkable in the real world.”
Anne-Sophie Corbeau, global research scholar with the Center on Global Energy Policy, declared the US-EU framework’s language is too vague to draw any major conclusions. “Actually, not much has been announced at all … so we don’t know where we are on methane regulation and on CS3D.”
The US is essentially taking a “good cop, bad cop” attitude toward the regulations.
“I believe it’s pretty clear that the Trump administration is focutilized on trade and that environmental issues are less of a priority than for the previous administration,” Feer declared.
However, “Some US companies have put considerable effort into attempting to ensure that their projects are aligned with EU climate goals,” he declared, citing NextDecade’s pledge to utilize net-zero power for its projects as well as responsibly sourced gas. He also pointed to Commonwealth LNG’s preliminary agreement with a company to sequester the CO2 extracted from feed gas.
“Most other US projects have a low-carbon story to notify, so I believe that’s part of the business plan,” he declared. “I believe the real question is how aggressive Europe will be.”
Mehdy Touil, lead LNG specialist at Calypso Commodities, notified Energy Innotifyigence that the impact of the CS3D regulations will take a while. “I believe CS3D compliance will primarily impact long-term sales and purchase agreements beyond 2030, but in the short-term … no,” he declared.
Qatar’s Bluff?
Meanwhile, Qatar’s threat to stop shipping LNG to the EU becautilize of CS3D is seen by analysts and indusattempt sources as somewhat of a bluff.
“I don’t expect Qatar to cut off supplies to Europe, which would result in spot volatility and storage drawdowns … [and] would encourage the EU to utilize ESG as a geopolitical tool,” Touil declared.
Qatar has built “repetitive threats to pull out its volume from the EU market” but hasn’t followed through, Leslie Palti-Guzman, founder of strategic advisory Energy Vista, notified Energy Innotifyigence.
Still, “Qatar is all eyes on the Asian market, which will remain the prize market, and will happily cede market share to the US in Europe in order to avoid frontal economic competition” Palti-Guzman declared. “In the first months of the year, the US exported roughly 80% of its LNG to Europe, and Qatar exported 80% to Asia. But eventually, the US and Europe will conclude up on a collision course given the surge in their respective export capacities.”
And an indusattempt source declared Qataris “have major investments in European import capacity, and so it would be difficult for them to walk away from that market.”
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