POWER UP-Trading Risk

By Ron Bousso

LONDON, Sept 11 (Reuters) - Hello Power Up readers,

This week I'm writing from beautiful Milan where the world's natural gas industry gathered for the annual Gastech conference. But this has been no usual trade fair. Beyond the dozens of company booths showcasing the sector's latest technologies, government representatives and company executives took to the stage to explain how the gas market, and in particular liquefied natural gas, is reshaping the global economy and geopolitics.

Unsurprisingly, much of this discussion centered on Russia. It may appear quite audacious for the U.S., the world's largest natural gas producer, to demand that its biggest market stop buying from a competitor. But that's exactly what unfolded at Gastech when U.S. Interior Secretary Doug Burgum delivered a clear message: Europe should stop purchasing gas from Russia, which the United States would happily replace. There's more on this below.

Quite a lot happened at the conference and elsewhere in the energy universe this week. Here are a few highlights:

• The U.S. is building too many LNG plants, TotalEnergies CEO Patrick Pouyanne said, warning if all planned projects come online, this could lead to a long-lasting glut.

• Exxon Mobil expects strong growth in China's LNG demand, driven primarily by the transport and marine sectors, and it expects opportunities to increase in new markets across Asia Pacific, Africa and Latin America.

• Finally, as the war in Ukraine continues to rage, I wrote about how the recent wave of Ukrainian drone attacks on Russian oil refineries and export facilities could boost global refining profit margins – particularly those in the U.S. – just as the peak summer demand season fades.

I love hearing from you and would welcome your thoughts and suggestions on the sector and the newsletter, so don’t hesitate to message me at ron.bousso@thomsonreuters.com

TRADING RISK

American energy dominance.

A key pillar of President Donald Trump's agenda for his second term aims to bring both peace and prosperity to the world, Burgum told the audience of European energy officials and company executives at the Gastech conference. "We achieve prosperity at home and with our allies through energy abundance... Peace is achieved around the world by selling our energy to our friends and allies who don't have to buy from our adversaries," said Burgum, a former governor of the oil and gas-rich state of North Dakota.

The comments come as Washington is ratcheting up pressure on Europe to cut off its remaining purchases of Russian oil and gas to squeeze the Kremlin’s war economy and put pressure on President Vladimir Putin to agree to a ceasefire in Ukraine.

Europe sharply reduced its Russian pipeline gas imports following Moscow's invasion of Ukraine in 2022, and it aims to fully phase out purchases of Russian gas by 2027, if not earlier. Yet the region has continued to import some Russian gas through the TurkStream pipeline into Bulgaria.

And, importantly, Europe has arguably just traded one dependency for another. The region’s Russian pipeline volumes have mostly been replaced by LNG imports – and the majority of those have come from the United States. In the first half of 2025, Europe’s LNG imports rose by 25% from the previous year, reaching an all-time high of 92 billion cubic metres (bcm). The United States accounted for over 55% of those imports, followed by Russia at 14%.

Given this new reality, Europe has little choice but to go along with the Trump administration’s energy agenda.

The European Commission Director General for Energy Ditte Juul Jorgensen told the conference that the bloc will continue to strengthen its energy partnership with the United States. "The U.S. policy of energy dominance is complementary to our strategy of replacing Russian energy in our system," she said.

These words have already been translated into action, with several LNG supply deals announced in recent days.

Replacing Russia's LNG volumes with U.S. volumes would increase America’s share of EU LNG imports to around 70%. If the additional 16 bcm of gas imports via the TurkStream pipeline are also replaced, that could boost the portion to over 80%. That would equate to around 23% of total gas imports, when including pipeline imports from Norway, Azerbaijan and North Africa, according to Reuters calculations. For comparison, Russia accounted for around 40% of Europe's total gas imports before 2022.

While reliance on U.S. energy carries less political risk, such extreme dependence nevertheless exposes Europe to potentially severe disruptions such as a sudden drop in exports from the U.S. Gulf Coast due to hurricanes or heatwaves. And the chaotic policymaking out of Washington since January shows that political risk can exist among allies. Read my full column here.

Essential reading:

• The global crude oil market is facing two long-term fundamental shifts that will change how cargoes flow around the world and how they are priced, ROI Asia Commodities Columnist Clyde Russell writes from the APPEC conference in Singapore.

• Meanwhile, Europe's wind turbines are set to take over from solar panels as the main driver of clean electricity supply growth for the rest of 2025, as the end of the Northern Hemisphere summer brings less sunlight but windier conditions, ROI Energy Transition Columnist Gavin Maguire writes.

• And lastly, I recommend reading this analysis on how the growing policy divide between the United States and the European Union on Russian oil exports to India is likely to play out in the next month.

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