The American-Russian ‘pipe’. Why is Europe's energy sector still a battlefield?

Photo: Finance.ua

After all, it was believed that if the new leader was told that the US would also make a profit from energy, he would agree enthusiastically. But all plans have either stopped or slowed down, and we are entering a period of possible trade war between the EU and the US. The most absurd thing about this is that someone in the US government seems to have decided that Russian gas in Europe is better than American gas. However, this story itself reveals a situation much deeper than just a desire to supply energy - the process itself may indicate a desire to extend its influence and control over Europe and undermine the power of the entire block.

Moscovia's influence in Europe

General criticism of EU consumers, although there is some, is often superficial and emotional, with good reason, of course. For example, the countries of the block (mainly Germany and Eastern European countries) have been dependent on Russian energy resources through their policies and have done so deliberately, the main reason for such actions often being to stimulate economic growth and industry, where the price of energy resources has a key influence, but Ukraine's consumption of Russian gas was significant even after 2014.

The European Union is one of the largest markets for gas and overall energy consumption in the world (with almost 450 million people and $20 trillion in GDP, this is not surprising), but it does not have significant gas reserves to cover its own needs. This made it highly dependent on imports. And it so happened that the easiest and cheapest resource was from the USSR (initially), and then from Russia.

The Russian Federation benefited from this enormously and made incredible profits, which was reflected in the level of capitalisation of Gazprom, the key seller in Europe, which in 2008 was $367 billion. At that time, the company was among the world's largest in terms of capitalisation and had ambitious plans to reach $1 trillion. Gazprom expanded its influence by buying gas networks and suppliers, occupying a dominant and even monopolistic position in some national markets. Moreover, its influence was spreading to other areas, acting as a soft power on the continent, financing various cultural and media projects.

Competition in the European market

The EU already saw an obvious problem in such a significant influence on its energy sector by Russia, which at that time was actively dismantling the remnants of democratic institutions and had already intervened into another country. Therefore, in 2009, a package of changes known as the Third Energy Package was adopted. Formally, the changes were intended to create competition and a common single gas market (to which our country, by the way, owes the possibility of diversifying supplies after 2014), but in practice, the battle over Gazprom's place in Europe was one of the key ones. This was understood in Russia, which is why the country filed lawsuits with the World Trade Organisation against the EU's decision, and Putin from time to time mentioned a single energy market and plans to abandon fossil fuels in a negative connotation:

"We are talking, basically, about the confiscation of property", —said the Russian leader during talks with Jose Barroso in 2011.

The reforms themselves did not lead to the abandonment of Russian gas per se, as such huge volumes of gas are difficult to find in a short period of time. However, this approach created the conditions for diversifying the supply of the resource to the single market and allowed other suppliers to develop their imports to Europe. Nevertheless, long-term contracts and cheaper pipeline deliveries compared to LNG still made Russian gas more profitable to buy. So, despite the reforms, the share of Russian gas in the block's consumption grew from 2014 to 2021, reaching a maximum of 45%. In addition, gas is a specific resource that, unlike oil, requires a more specialised infrastructure for pumping from the countries of production, and there were few countries in the world that had such capabilities. However, such a country was found.

Deployment of US LNG in Europe

In 2018, during the first Trump administration, it was agreed to increase LNG supplies to Europe. At that time, the US was experiencing a ‘shale revolution’, which made it possible to increase supplies first to neighbouring countries and then, after the agreement, to the EU.

‘The European Union wants to import more LNG from the United States, and they will be a very, very big buyer. We will make it much easier for them, but they will be a massive buyer of LNG, so they will be able to diversify their energy supply, which they really want to do. And we have plenty of it’б — Trump said at a meeting with Jean-Claude Juncker.

The new supply plan has indeed begun to show results. Already in the year of signing the agreement, LNG supplies from across the Atlantic amounted to 15 million tonnes (or 20.7 billion cubic metres in equivalent), which accounted for 4% of the total consumption of the block, and in 2022, after the outbreak of a full-scale war, the supply volumes increased to 55 million tonnes (75.9 billion cubic metres), bringing the share of the American resource to 19% of the block's consumption. At the same time, the United States has the world's largest LNG terminal capacity, amounting to 92.1 million tonnes per year, and more than 50% of this capacity has already been directed to the European continent. This focus made it possible to make significant progress in replacing Russian resources in 2023.

Rejection of Russian gas

Despite the opinions of many Ukrainians, plans to abandon Russian gas have in fact always been in the European Union and have never been withdrawn from discussion. Due to the resistance of certain countries and the fear of destabilising the energy situation, the block was forced to take a difficult and gradual path. First and foremost, the EU authorities aimed to reduce overall gas consumption in the short term, as rapid substitution was not possible. In 2024, the EU consumed a total of 313 billion cubic metres, which is 21% less than in 2021. Out of this total, imports amounted to 273 billion, which is 18% less than in 2022. In other words, the block reduced not only total consumption, but also managed to reduce imports by relying on domestic production.

At the same time, the EU and individual countries are actively developing LNG capacity within the block and in exporting countries. In February 2025, the European Commission presented the ‘Affordable Energy Plan’, which provides funding for LNG pumping projects outside the EU. Individual countries are also actively developing their projects: Germany started building its first onshore LNG terminal in 2024 (in addition to the floating ones that have already been launched), Italy is also actively preparing to build a new onshore terminal, and countries such as Lithuania, Greece, and Cyprus are investing in floating terminals. In addition, the EU and its member states are looking for other alternatives to gas, such as hydrogen or nuclear power.

And while all these plans are being actively implemented, the total share of Russian gas is still significant (19%), and moreover, the share has increased compared to 2023, largely due to LNG. The reason for this was not an evil desire to buy up Russian resources, but the actions of the key supplier, the United States.

Thanks to the changes implemented, the EU achieved an important goal in a short term: the price of gas on European markets in early 2024 fell to its lowest level since 2021, making the market less profitable for American companies than Asian markets. Russia, on the other hand, simply needs to supply the resource, even at a loss, to maintain production levels, and has lower transportation costs. While this situation does not have a significant impact on the EU market, as Russia's share is still half the average of recent years, it runs counter to the intention of a complete withdrawal.

Therefore, the EU authorities have decided to take advantage of Donald Trump's coming to power and his tariff wars. As already mentioned, Trump was the one who opened up US gas supplies to Europe, and so this is a great opportunity to give the ‘fairness’ in trade that he so desperately wants. As direct sanctions are not possible in the current situation, the EC is considering imposing tariffs on Russian LNG to make it unprofitable and allow European companies to early terminate contracts with Russian suppliers. This idea is key to the overall plan of the US-EU deal, as, in parallel with Trump's tariffs, China has effectively blocked access for US gas to its market. Although the volumes of supplies to China are not so significant, geopolitically, this should give the US an incentive to more actively promote gas trade with the EU.

Americans and pipelines

However, there is still an internal problem for the European Union in the gas issue: gas pipes and their more cost-effective use. Hungary and Slovakia are actively speculating on this topic, claiming that there is no general alternative. After Trump's election, media reports began to appear that some US officials were allegedly considering the possibility of the Americans buying out Nord Stream. Formally, this is explained by the withdrawal of Russia from the project, which makes gas supplies more stable (this logic deserves only criticism). At the same time, there are reports that the Americans want to take control of the Ukrainian gas transmission system, which makes no sense at all, since Ukraine no longer transits gas through its territory. The key is that for the EU, pipelines are no longer as important in terms of energy security as they are for Russia in terms of revenue.

Although Russia does have LNG capacity, it is not comparable to the potential of the Turkish Stream, the Ukrainian route and the two branches of the Nord Stream. The loss of the European market has already led to the fact that Gazprom, once one of the most profitable companies in Russia, has been posting catastrophic record losses for the second year in a row. The European Commission understands that the use of pipelines should be a thing of the past, so although it is facilitating negotiations with Ukraine to resume gas transportation (at the request of Slovakia and Hungary), it is not really interested in such actions and is proposing alternative plans (such as using Ukrainian storage facilities to store imported gas from overseas).

It should be understood that even minimal pumping through Ukraine gave Russia 14 billion cubic metres of exports, which is a quarter of its total exports to the EU, and the introduction of new duties on Russian LNG would collapse exports even further. Russia is actively opposing these plans, stimulating discussions about resuming gas exports through the pipeline mainly in Germany, where it still has a strong lobby in key parties such as the CDU and SPD, and adding to this lobbying for such ideas in America.

The only beneficiary of the transfer of ownership of the gas infrastructure would be Russia, and the EU could end up with a new period of dependence. The first person to raise the issue of buying out Nord Stream was American businessman Steve Lynch, who specialises in distressed assets, including Russian ones. He has already participated in the buyout of the assets of the bankrupt Russian energy company Yukos (whose resources were nationalised) in 2007 and the Swiss branch of Sberbank in 2022. Although this does not indicate a direct connection with the Russian authorities, when buying the assets of a private Russian company, the state-owned ‘Rosneft’ refused to participate in the auction, although it had been the main buyer of the assets before. The situation becomes even more interesting with Lynch's business partner David Hearn, who is an active investor in Russia to this day. Hearn has sat on the boards of directors of RAO ‘UES’ (Russia's largest energy company until 2008 and one of the largest in the world) and Aeroflot, and also owns shares in various companies, including energy companies. Vitkoff, who, according to media reports, is lobbying for the cancellation of energy sanctions, owned a stake in the aluminium producer Rusal.

So we see that while the Americans are showing interest as seemingly outside managers, their significant ties with Russia make it questionable whether such lobbying is unbiased. By selling it as an idea of independent control, they are trying to return the European gas market to Russia, which will primarily hit American companies, which obviously will not be able to compete with cheaper pipeline gas.