Donald Trump’s EU oil and gas deal is ‘pie in the sky’, energy experts warn
Analysts dismiss plan but executives welcome sign of more support for fossil fuel exports
Brussels’ vow to buy $750bn of American energy as part of a new US-EU trade deal will be impossible to meet and is based on “pie in the sky” numbers, experts have warned, even as producers said it could boost sales.
The deal, announced by President Donald Trump and European Commission president Ursula von der Leyen on Sunday, requires EU companies to buy $250bn worth of US oil, natural gas and nuclear technologies for each of the next three years.
Analysts were puzzled by a target that would involve decisions by shareholder-owned companies in a continent also trying to decarbonise its economy.
“Even if Europe did want to increase its imports, I don’t know the mechanism by which the EU goes to these companies and tells them to buy more US energy,” said Matt Smith at energy consultancy Kpler.
The numbers were “pie in the sky”, he added. “Companies are beholden to their shareholders and have a duty to buy the cheapest feedstock.”
The announcement on Sunday put energy at the heart of a trade deal Trump claimed was one of the most significant ever, averting a looming tariff war between two of the world’s biggest economies.
Trump has touted an era of American “energy dominance” based on “unleashing” fossil fuel output, although drilling in the prolific shale oil and gas sector has slowed since he returned to the White House.
Shares in US energy companies rose on Monday on news of the EU deal, which could buoy liquefied natural gas and oil exporters that have already benefited from Europe’s efforts to cut Russian energy imports.
But the rally faded as the reality of the Trump plan, which was light on details other than the top-line number, sank in.
Last year, the EU imported more than $435.7bn worth of energy — but US fossil fuel supplies to the bloc accounted for just $75bn.
Brussels still has a plan to phase out purchases of Russian gas altogether by 2028, including LNG, which would open another gap for US exporters.
But analysts say the $250bn target would be impossible to meet while ensuring Europe’s — and Trump’s — desire for cheap, secure energy supplies.
“This would require Europe to import a lot more volumes of gas and oil from the US, diverting away from other suppliers, while assuming oil and gas prices would remain high or even increase to reach the $250bn target,” said Anne-Sophie Corbeau, an energy analyst at Columbia University’s Center on Global Energy Policy.
“We want to reduce energy bills and President Trump wants to reduce oil prices — so this agreement makes no sense.”
American producers were more enthusiastic about the deal, saying it would help European companies that import energy to sign more US supply deals.
The American Petroleum Institute, Big Oil’s powerful Washington lobby group, said the agreement would “solidify America’s role” as a critical supplier to Europe.
LNG executives said it could help developers secure more financing to build a new wave of liquefaction plants in the Gulf of Mexico — the heart of the US’s bustling gas-export industry.
“This is a catalyst that certainly supports continued offtake contracting,” said Ben Dell, chair of Commonwealth LNG, referring to long-term purchase agreements. His company is developing a new liquefaction facility in Louisiana.
Hours after Trump and Von der Leyen announced the trade deal, Venture Global, an US LNG exporter with multiple European contracts, said it was moving ahead with a $15bn project to produce 28mn tonnes of LNG a year — equivalent to almost half of Germany’s current gas demand.
“We applaud President Trump’s trade deal,” said Venture Global chief executive Mike Sabel, although he acknowledged the financing for the project was arranged earlier. Venture Global would “quickly deliver . . . abundant LNG supply”.
Shares in Venture Global jumped by almost 8 per cent early on Monday, while those of rival LNG producers Cheniere Energy and NextDecade rose by almost 5 per cent. Venture Global closed up 4 per cent and Cheniere and Next Decade were both up by about 1 per cent.
The S&P 500 energy sector, which includes the oil and gas companies that would supply the extra energy for a new export boom, closed just over 1 per cent higher.
Analysts pointed to Trump’s history of big-ticket announcements that also failed, including a 2020 deal with China in his first term. Beijing was supposed to buy an extra $200bn worth of US exports, but did not.
“The first-term history of phase one, managed trade with China offers an inauspicious precedent for the $750bn EU energy pledge,” said Kevin Book, managing director at ClearView Energy Partners, a Washington consultancy.
Bill Farren-Price, head of gas research at the Oxford Institute for Energy Studies, said it was hard to see how the EU could mount a fivefold increase in the value of energy imports from the US while it pivoted to renewables.
“European gas demand is soft and energy prices are falling. In any case, it is private companies not states that contract for energy imports,” he said. “Like it or not, in Europe the windmills are winning.”