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Daniel J. Graeber

Daniel J. Graeber

Daniel Graeber is a writer and political analyst based in Michigan. His work on matters related to the geopolitical aspects of the global energy sector,…

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Obama Hops on LNG Train, but is that Train Even Leaving?

U.S. President Barack Obama said a trans-Atlantic trade deal under review could help break Russia's grip on the region's energy sector. New LNG leeway in the United States could help the cause, though any meaningful relief for Europe may arrive long after the immediate crisis is over.

"Once we have a trade agreement in place, export licenses for projects for liquefied natural gas destined to Europe would be much easier, something that is obviously relevant in today's geopolitical environment" the president said.

U.S. policymakers have said more energy exports could help European allies, Ukraine in particular, who are struggling to break Russia's grip on the region's energy sector. Most of Russia's gas bound for Europe runs through the Soviet-era gas transit network in Ukraine and recent turmoil has sparked concerns about the future of the region's energy security.

Related Article: U.S. Gas Prices May Fluctuate if Canadian Bottleneck Eases

The United States doesn't have free trade agreements in the European Union, though the trans-Atlantic deal could change that.  EU Trade Commissioner Karel De Gucht said an EU trade deal would open an "ambitious chapter on energy" if embraced by both sides.

Concerns, however, over U.S. National Security Agency spying in Europe, coupled with issues over customs duties, have brought few developments on the trade deal in the past year.

Momentum, however, emerged this week when the U.S. Energy Department awarded an export license for the Jordan Cove energy project in Oregon. That means domestically produced LNG can leave the western port for countries without a free-trade agreement with the United States.

U.S. Sen. Lisa Murkowski, R-Alaska, ranking member of the Senate Energy Committee, said that deal, and the dozens of pending deals just like it, could bring relief to overseas allies.

"Given the situation in Ukraine, this license sends a positive signal to our allies and to energy markets that the United States is ready to join the growing global gas trade," she said.

Obama's comments during talks with European leaders could help allay some of the concerns about regional energy security given the new-found American leverage from shale. The White House said Wednesday that trade barriers could be eliminated for the sake of both sides of the Atlantic. A robust trade relationship would not only promote globally security, but advance energy security bilaterally, the president's office said.

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Bipartisan leaders from the House and Senate this week heard testimony on how best to exploit the leverage brought on by the abundance of U.S. energy reserves. At home, policy concerns stem from environmentalists worried about the consequences of more hydraulic fracturing to what impact more exports would have on domestic energy prices. Overseas, meanwhile, it's unclear how ready Europe is to take on more LNG even if the remaining U.S. export licenses are expedited.

Sen. Mary Landrieu, D-La., chairwoman of the Senate Energy Committee, said the United States could position itself as a global energy superpower with more exports. Testifying before the committee, Edward Chow, a senior fellow for energy security at the Center for Strategic and International Studies, said it would be 2015 at the earliest before U.S. natural gas supplies make their way to Europe even under the most optimistic of scenarios

"Export of LNG is not a silver bullet for Europe," he said.

By Daniel J. Graeber of Oilprice.com


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Leave a comment
  • John D on March 27 2014 said:
    Ok, so even though the US is a net importer of energy, and god knows we have enough problems here, we need to send gas and money to a bankrupt nation because they face a Russian threat. Maybe Detroit should ask Russian to invade their city.

    I think the bottom line is that Ukraine needs to realize who butters their bread. They get subsidized oil from Russia, are totally dependent on Russian oil, then they decide to stick it to Russia and align themselves with Western Europe and expect us to bail them out.
  • Brian on March 28 2014 said:
    The Israelis and Crete are now in possession of huge amounts of offshore gas. If that were drilled and floating LNG production units were put in place, that gas could be sent anywhere along the northern Med within days.

    There's plenty of gas closer to Europe than us. Don't export our gas. It will only harm US consumers.
  • Roland on March 28 2014 said:
    Don't be fooled. The US is not going to sell LNG to anywhere in Europe when shippers can get ~$16/mcf in Japan, Korea, & China. Kamchatka can't meet that demand, and that price won't fall until Gorgon starts shipping.

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