Changing Restrictions on Russian Gas to Europe Would Disproportionately Impact US LNG Exports, New S&P Global Commodity Insights Study Finds

Rhea-AI Summary

A new S&P Global Commodity Insights study reveals that changes in Russian gas restrictions to Europe could significantly impact U.S. LNG exports. Under an "Opening the Taps" scenario where sanctions on Russian gas are lifted, over 17 MMtpa in new U.S. LNG projects (worth $70 billion in investments) would be curtailed. Conversely, a "Phasing Down" scenario of Russian gas would add 12 MMtpa in U.S. LNG projects ($48 billion in investments). The difference between scenarios represents 29 MMtpa in project decisions and $120 billion in investment impact. The study outlines three scenarios: "Current Trend" (33.7 MMtpa), "Opening the Taps" (16.5 MMtpa), and "Phasing Down" (45.5 MMtpa), highlighting the U.S. LNG sector's vulnerability to European policy changes and Russian gas flow restrictions.

Positive

• Currently supplies 50% of Europe's LNG imports and 15% of total gas supply
• Potential for $186 billion in U.S. LNG value chain expenditure under 'Phasing Down' scenario
• Opportunity for 45.5 MMtpa in new projects under favorable scenario
• Strong position as balancing supply for global LNG markets

Negative

• High vulnerability to changes in Russian gas restrictions
• Potential loss of $70 billion in investments if Russian sanctions are lifted
• Risk of 17 MMtpa reduction in new projects under 'Opening the Taps' scenario
• Disproportionate impact from policy changes due to contractual structures

Insights

Energy Market Analyst

S&P Global study reveals Russia-Europe gas policy could impact $120B in U.S. LNG investments, highlighting geopolitical risks without directly affecting SPGI's financials.

S&P Global's Commodity Insights division has produced a revealing study on the precarious position of U.S. LNG exports in relation to European-Russian energy policies. The research identifies three distinct scenarios with dramatically different outcomes for U.S. LNG investment. Under the "Opening the Taps" scenario where Russian sanctions are withdrawn, $70 billion in potential U.S. LNG investments would be curtailed compared to current trends, with new projects reduced by 17 MMtpa. Conversely, a "Phasing Down" scenario with stricter restrictions on Russian gas would boost U.S. LNG project decisions by an additional 12 MMtpa, representing $48 billion in increased investment.

This analysis is particularly significant given the U.S. currently supplies 50% of Europe's LNG imports and 15% of its total gas supply. The research highlights U.S. LNG's vulnerability as the "balancing supply" for global markets due to its contractual structures and market liquidity making it more responsive to price signals.

The $120 billion investment differential between extreme scenarios underscores the geopolitical risks facing the LNG sector. For stakeholders in the energy space, this research demonstrates S&P Global's analytical capabilities in mapping complex energy market dynamics, though it doesn't represent a direct financial catalyst for SPGI itself. The study primarily serves to showcase the company's thought leadership in the energy sector while providing valuable market intelligence to its clients about potential shifts in global gas trade flows.

Future course of sanctions and flow of Russian gas to Europe could impact up to $120 billion of investment and 29 MMtpa for future U.S. LNG projects

WASHINGTON, May 8, 2025 /PRNewswire/ -- The United States, which currently supplies half of Europe's liquefied natural gas (LNG) imports and roughly 15% of the continent's total gas supply, would be disproportionately impacted if current restrictions on Russian gas and LNG were to change, a new S&P Global Commodity Insights study finds.

The report, U.S. LNG Exports at Risk: Potential Unwinding of Sanctions on Russian Natural Gas found that, under an "Opening the Taps" scenario where U.S. sanctions on Russian natural gas pipeline and LNG exports are withdrawn and new volumes of Russian gas flow to Europe, more than 17 million metric tons per annum (MMtpa) in new U.S. LNG projects—representing $70 billion in related investment—would be curtailed compared to a "Current Trend" scenario.

Conversely, a scenario with Europe increasingly "Phasing Down" Russian LNG and most piped gas, largely consistent with the EU Commission's REPowerEU Roadmap published on May 6 would result in an additional 12 MMtpa in U.S. LNG projects reaching final investment decision—representing an additional $48 billion in related investment. 

The outcomes between the "Opening the Taps" and "Phasing Down" scenarios represent 29 MMtpa in U.S. LNG project final investment decisions and nearly $120 billion in related investment impact.

"Any changes to restrictions on Russian gas flows to Europe would dramatically impact U.S. LNG in market share and investment," said Carlos Pascual, Senior Vice President, Global Energy, S&P Global Commodity Insights. "On the downside, unwinding Russia sanctions would reduce the market for U.S. LNG, curtailing investment in future U.S. projects and simultaneously undermining European efforts to diversify gas imports."

U.S. LNG is disproportionately impacted across the scenarios given its nature as the balancing supply for global LNG markets. Its contractual structures and U.S. market liquidity mean that it reacts more quickly to price signals.

Given the volatility seen in policy on gas exports and imports, European policy decisions could evolve over time depending on wider political circumstances in Europe and globally thus validating all three potential scenario outcomes.

Scenario 1: "Current Trend":

U.S. LNG Liquefaction project FIDs (2025-2027): 33.7 MMtpa
U.S. LNG Value Chain Direct Expenditure (2025-2040): $138 billion

S&P Global Commodity Insights expects new contracts for LNG to be critical to closing a growing European gas supply gap that is driven by demand recovery, declining domestic production and piped imports and LNG contract expiry. Addressing the supply gap, along with the need for energy security and preferences to reduce exposure to volatile spot markets provides space for additional LNG contract signings and thus potential for additional financing for liquefaction projects in the United States and elsewhere.

• Russian pipeline gas to Europe continues via TurkStream
• Russian LNG still purchased by some European countries
• Sanctions continue to limit new Russian LNG projects
• Russia's Power of Siberia-2 pipeline to China launches in the 2030s

Scenario 2: "Opening the Taps": 

U.S. LNG Liquefaction project FIDs (2025-2027): 16.5 MMtpa
U.S. LNG Value Chain Direct Expenditure (2025-2040): $67 billion

• Additional 2.7 bcf/d Russian pipeline gas to Europe via the remediation of an existing pipeline route from July 2025
• Sanctions on Russian LNG are lifted, adding 9 MMtpa Russian export capacity by 2035 versus the Base Case
• Development of existing and future Russian LNG projects accelerates

Alternate Scenario 3: "Phasing Down": 

U.S. LNG Liquefaction project FIDs (2025-2027): 45.5 MMtpa
U.S. LNG Value Chain Direct Expenditure (2025-2040): $186 billion

• Complete ban on Russian LNG to Europe from January 2026
• Arctic-2 LNG ramp-up delayed and Yamal LNG deliveries effected by shipping and trade-route logistical challenges
• Pipeline flows continue to Southeast Europe via Turkey, as per the Base Case

About the Study: 

U.S. LNG Exports at Risk: Potential Unwinding of Sanctions on Russian Natural Gas is available at: https://www.spglobal.com/en/research-insights/special-reports/us-lng-exports-at-risk-potential-unwinding-of-sanctions-on-russian-natural-gas

The study offers an independent and objective assessment of the impact of alternative Russian natural gas and LNG scenarios on the global gas balance and the U.S. LNG industry. It is built from a detailed bottom-up approach, at the asset and market level, technology by technology.

U.S. LNG Exports at Risk: Potential Unwinding of Sanctions on Russian Natural Gas is part of S&P Global's ongoing major research initiatives examining the economic impacts of U.S. LNG exports. Previous reports found that the growth of U.S. LNG export capacity would support nearly half a million domestic jobs annually and contribute $1.3 trillion to U.S. gross domestic product through 2040 while having a negligible impact on domestic gas prices, and that the continued development of U.S. LNG export capacity would result in significantly lower global greenhouse gas emissions compared to the alternative energy sources that would be required to meet demand in their place.

The analysis and metrics developed during the course of this research represent the independent analysis and views of S&P Global Commodity Insights. The study assesses the market impacts of different scenarios to provide others a basis for informed policy choices. The study was supported by the U.S. Chamber of Commerce.

S&P Global Commodity Insights is exclusively responsible for all of the analysis, content and conclusions of the study.

Media Contacts:

Jeff Marn +1-202-463-8213, Jeff.marn@spglobal.com 

About S&P Global Commodity Insights

At S&P Global Commodity Insights, our complete view of global energy and commodity markets enables our customers to make decisions with conviction and create long-term, sustainable value.

We're a trusted connector that brings together thought leaders, market participants, governments, and regulators and we create solutions that lead to progress. Vital to navigating commodity markets, our coverage includes oil and gas, power, chemicals, metals, agriculture, shipping and energy transition. Platts^® products and services, including leading benchmark price assessments in the physical commodity markets, are offered through S&P Global Commodity Insights. S&P Global Commodity Insights maintains clear structural and operational separation between its price assessment activities and the other activities carried out by S&P Global Commodity Insights and the other business divisions of S&P Global.

S&P Global Commodity Insights is a division of S&P Global (NYSE: SPGI). S&P Global is the world's foremost provider of credit ratings, benchmarks, analytics and workflow solutions in the global capital, commodity and automotive markets. With every one of our offerings, we help many of the world's leading organizations navigate the economic landscape so they can plan for tomorrow, today. For more information visit https://www.spglobal.com/commodity-insights/en. 

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SOURCE S&P Global Commodity Insights

FAQ

What is the potential impact on U.S. LNG exports if Russian gas restrictions to Europe change?

Changes could impact up to $120 billion in investment and 29 MMtpa for future U.S. LNG projects, with U.S. exports being disproportionately affected due to their role as global market balancer.

How much of Europe's gas supply does U.S. LNG currently represent?

The U.S. currently supplies 50% of Europe's LNG imports and approximately 15% of the continent's total gas supply.

What are the three scenarios outlined in the S&P Global study for U.S. LNG projects?

The study outlines 'Current Trend' (33.7 MMtpa), 'Opening the Taps' (16.5 MMtpa with lifted Russian sanctions), and 'Phasing Down' (45.5 MMtpa with increased Russian restrictions) scenarios.

How much investment could be lost if Russian gas sanctions are lifted?

Under the 'Opening the Taps' scenario with lifted Russian sanctions, over $70 billion in related investment for new U.S. LNG projects would be curtailed.

What is the potential upside for U.S. LNG if Europe phases down Russian gas?

Under the 'Phasing Down' scenario, U.S. LNG could gain an additional 12 MMtpa in projects reaching final investment decision, representing $48 billion in related investment.