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Gas Wars: Will US Export LNG to Europe?

Gas Wars: Will US Export LNG to Europe?

Russia’s move on Ukraine’s Crimea region has sparked Central European countries to increase calls for the United States to export its natural gas to Europe and help the region reduce its energy reliance on Moscow.

Former Soviet satellites Poland, the Czech Republic, Hungary and Slovakia—otherwise known as the “Visegrad 4”—are hoping to lobby Washington to remove bureaucratic hurdles for exporting US natural gas to Europe to minimize the effects of gas a key weapon in Russia’s political arsenal.

“With the current shale gas revolution in the United States, American companies are seeking to export gas, including to Europe. But the existing bureaucratic hurdles for the approval of the export licenses to non-FTA (free-trade agreement) countries like the Visegrad countries are a major hurdle,” the four countries’ ambassadors to the US wrote in a letter to House Speaker John Boehner.

Related Article: Ukraine: Vultures of Political Capital Descend

Last year, Russia's Gazprom supplied the European Union and Turkey with a record 162 billion cubic meters of gas. Of that gas, 86 billion cubic meters transited Ukraine, and the current showdown between Russia and Ukraine over the latter’s majority ethnic-Russian Crimea region, has the rest of Europe fearful of another supply cut-off.

Previous disputes over gas payments between Russia and Ukraine have caused Russia to cut off supplies that feed Eastern and Central Europe.

Last week, Russia threatened the new interim Ukrainian government that it might shut off the taps over unpaid bills, and particularly over $440 million that was due in February.

For Ukraine, getting the US to export liquefied natural gas (LNG) to Ukraine and to the wider Central European region, is now more vital than ever. And if this conflict escalates, it could derail gas deliveries bound for Europe, because much of Europe’s gas goes through pipelines that pass through Ukraine.

Before the mass protests that led to ouster of President Viktor Yanukovych in February, there were already efforts underway to build a floating offshore terminal to receive LNG shipments. It would be a powerful message to Russia if American-flagged vessels were bringing LNG here.

Related Article: How the Situation in Crimea Could Cause Oil Prices to Fall

However, even if the US moves to heed Central Europe’s pleas, natural gas in the form of LNG would not reach European shores before 2016, but the message to Russia would nonetheless be a strong one.

The idea is gaining momentum in Washington, though. On 10 March, Senator John Barrosso (R-Wyo.) announced plans to introduce amendments to the economic assistance package to Ukraine that will be considered by the Senate Foreign Relations Committee. The amendments will focus on allowing the US to export LNG to Ukraine and members of NATO.

By James Stafford of Oilprice.com

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Leave a comment
  • theblamee on March 13 2014 said:
    Why would the U.S. even attempt to export its natural gas to Ukraine? Ukraine cannot even pay its natural gas bills to Russia. What? The U.S. is going to give its natural gas away?
  • Brad on March 16 2014 said:
    In this article Mr Stafford perpetuates the idea---which only surfaced for the first time after the Ukrainian crisis erupted---that the U.S. should export LNG to Europe to assist them in case Russia should cut off the natural gas they supply. It is amazing how ideas based on misinformation and ignorance can take root and gain currency in the media. Today the U.S. has NO plants, not one, capable of converting our nat gas to LNG. And the one that is scheduled to come on stream in late 2016 will only produce a tiny amount of LNG compared to what Europe would need to replace Russian gas. That's two and a half years from now. By that time the crisis will have passed and be forgotten.
  • Amvet on March 17 2014 said:
    Brad has it almost right. We do have one plant to make LNG. It is old, relatively small, is in Alaska, exports LNG to Asia and is very profitable. For Atlantic side LNG, it is late 2016 as Brad says.

    Long term Asian contracts for LNG are around $15. The Ukraine pays $7.70 and the EU $11.50.

    Politicans and journalists seem uninformed and only want to trash Russia. The German business men I know say that Russia is a very reliable trading partner. The USA and the UK continuously say otherwise.
  • Mike O. on April 16 2014 said:
    You pin-heads don't seem to understand the point of all this. The point is to send a message to that thug Putin that the West is still in charge in the post-Cold War world. You silly little Obama-ites and Mr. Nobel Peace Prize seem to be of the opinion that there is no need for power politics anymore, that just apologizing for everything the West has done over the last 70 years and unilateral concessions pass for a foreign policy. This is at least naïve, and at most very dangerous. Mr. Putin has been leading this President around by the nose for several years now; I guess he enjoys it.

    And as far as the German businessmen go, your opinion is laughable. Of course the Germans couldn't care less what goes on in Moscow; unfortunately Poland and the rest of Eastern Europe don't have the luxury of a buffer state when the tanks start to roll. In case you were asleep in junior high (clearly you were), the Germans and the Russians have been partitioning Poland for 300 years. You might want to excuse the Poles for not wanting to see that happen again.

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