EU-US energy deal seen as political symbol, not LNG game-changer

A recent report by the international intergovernmental organization Gas Exporting Countries Forum (GECF) has highlighted the potential implications of the trade deal signed between the US and the EU on the liquefied natural gas (LNG) market dynamics.

According to the expert commentary ‘Viability of LNG Trade Growth under the EU-US Trade Deal,’ the EU–US trade deal from July, which resulted from the discussions of tariffs announced by the US, is more likely to function as a political symbol of transatlantic solidarity than a catalyst for major LNG trade growth.

Under the non-binding deal, the EU committed to importing $250 billion annually of US energy, or $750 billion in total, by 2028, with LNG expected to anchor this expansion. The deal covers natural gas, oil, and nuclear fuels, paired with an additional $600 billion of investment in the US economy.

However, GECF labels these targets as unrealistic and believes the deal could face the same fate as the energy targets of the 2019 US–China trade deal, which remained unmet since the deal created no legal obligation for either side, much like the deal in question.

The Forum bases its analysis on several factors, including, among others, the decline in EU gas demand, infrastructure bottlenecks, and the fact that the EU’s climate policies conflict with deeper fossil fuel dependence, as recently echoed by the European Environmental Bureau (EEB).

The US introduced hefty new tariffs in April 2025 to shield domestic industries from foreign competition and to realign international trade in favor of US economic interests. GECF sees this as happening in a context of a seismic shift in the global trade system toward protectionism.

A baseline 10% tariff on imports from 185 countries was introduced, with a 20% country-specific tariff applying to EU member states. These higher tariffs have been repeatedly suspended, which GECF interprets to signal their use as leverage rather than as a permanent trade measure.

The tariffs were paired with an Executive Order providing for the reduction of tariffs if a trading partner takes “substantial steps” to address the US trade deficit. Since the EU represents 18% of total US imports, it emerged as the focal point of the US’s discussions with partners to address trade imbalances.

In late July, the duo worked out a framework trade deal in which most EU goods would be subject to a 15% import tariff. Additionally, the EU committed to importing $750 billion of US energy by 2028 and investing an additional $600 billion in the US economy.

Since the US exported around $70 billion worth of energy to the EU in 2024, the $250 billion annual commitment would represent more than a threefold increase for the EU, whose total energy import bill reached $407 billion in 2024.

Between 2021 and 2024, the share of pipeline gas in total EU consumption dropped by 20%, from 70% to 50%, while LNG’s share rose by the same amount, from 20% to 40%. This enabled the US to boost its gas exports to the EU from 6% to 19% and LNG from 28% to 45% over the same period.

The trend accelerated in the first half of 2025, when LNG imports surpassed pipeline gas imports in the EU for the first time. The North American country’s LNG exports to the EU amounted to $20 billion in 2024.

While the EU’s imports from the US could reach record levels by the year’s end, the report states the trade deal’s targets are highly ambitious, noting that both sides seem to be overpromising what can realistically be bought and sold.

The US currently has 105 million tonnes per annum (Mtpa) of operational LNG capacity, with an additional 115 Mtpa under construction and 100 Mtpa of planned capacity targeting FID.

Some notable projects in the development stage include Woodside Energy’s Louisiana LNG project, which is said to be 22% complete, and Venture Global’s CP2 LNG, for which $15.1 billion in financing was recently secured.

Therefore, a maximum of 100 Mtpa is theoretically available for future deals. This is expected to be even lower in practice as Asian countries have expressed their interest in purchasing US LNG, for example, in the case of Alaska LNG.

Supplying the full 100 Mtpa at current spot prices would generate only $60 billion annually for the US, which is well below the levels needed to make a meaningful contribution to the EU-US trade agreement, the report states.

An additional issue is the EU’s lack of gas demand to absorb additional LNG volumes from the US. Regional gas consumption fell sharply from 400 bcm in 2021 to 313 bcm in 2024, driven by a combination of structural and cyclical factors.

With the Union’s gas demand expected to remain flat or even decline slightly by the end of this decade, a major expansion of US LNG supply to the EU market could be limited.

Additionally, even though the EU is approving new LNG projects, capacity utilization rates remain around 50% because of the limited gas interconnection infrastructure. One example of this is Spain. While having the largest regasification capacity in the EU, the country lacks pipeline connections with neighbouring countries, so LNG cannot be distributed regionally.

The report further states that substituting spot and short-term LNG volumes from other suppliers is the best course of action for boosting US LNG exports because the majority of gas and LNG imports in the EU are tied to long-term contracts and are not easily redirected. However, there is limited scope for this to happen since a large share of spot and short-term LNG volumes already came from the US in 2024.

Another potential problem highlighted in the report is the fact that, whatever the authorities agree on, the final commercial decisions will rest with private companies. GECF explained that the EU companies base their decisions on profitability, and governments can only signal support or provide incentives, not compel them to buy US gas.

A final consideration is the fact that a boost in US LNG imports is at odds with the EU’s long-term climate objectives and net-zero objectives. The EU methane regulation is an additional factor complicating the situation and making the increase in US LNG imports difficult to achieve.

GECF feels that Europe could be at a disadvantage with the deal, as it could undermine climate credibility, increase the risk of stranded assets, and complicate the clean energy transition intended to support sustainable economic growth. 

In conclusion, the organization believes that while the EU–US trade deal could theoretically have an impact on the global LNG market, it is more likely to function as a political signal of solidarity than as a major commercial driver of energy trade growth, particularly in the LNG segment.

“Moreover, roughly 250 Mtpa of LNG export capacity is under construction worldwide, and overall supply is expected to grow in line with rising global gas demand under stable prices. This expansion provides sufficient room for all major LNG suppliers.

“With Asia driving the bulk of future LNG import growth, any additional US LNG directed to the EU is likely to be offset by increased supplies to Asia from other producers, primarily GECF member countries, thereby maintaining overall market equilibrium,” the report concludes.

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