The European Commission released a report Tuesday detailing its plans to reduce the continent’s dependence on Russian energy by importing liquefied natural gas from the U.S. and Australia.
The report states that the European Union “has a major opportunity to improve its energy security and its competitiveness thanks to the positive development of the global LNG market.” Both Europe and America have a lot of infrastructure to build before LNG sales can really get going.
“To me the key point in the report is the focus on the mis-match of LNG infrastructure location and markets such as those in central and eastern Europe that are most dependent on Russian gas,” Richard D. Kauzlarich, former U.S. ambassador to Azerbaijan and Bosnia, told The Daily Caller News Foundation.
“As the report points out the key issue is ‘commercial viability,'” Kauzlarich said. “Determining this is complicated by the future of LNG prices compared to pipeline gas prices, and the impact of EU climate and renewables policy on demand for natural gas, whatever the source, that could result in ‘stranded’ LNG infrastructure assets if investors guess wrong.”
LNG has the potential to reduce Russia’s ability to use state-controlled companies, such as Gazprom, as a political weapon against America’s allies in Eastern Europe. Russia used interruptions in the natural gas supply in 2006, 2009 and 2015 to put political pressure on Eastern European countries like Ukraine, Poland and the Baltic states. About half of Europe’s imported natural gas comes from Russia, which has previously attempted to use its control over natural gas to harm Ukraine.
Luckily for Ukraine, the country was able to reduce its dependence on Russian gas and switch suppliers. American LNG exports could compete against Russian gas, forcing the country to rethink how it treats American allies who can now have gas options. The report acknowledges that a diversified supply of LNG is critical to European energy security and competitiveness.
“The report does not envisage significant US LNG exports to Europe until after 2020 and then it will compete with Australian LNG as well as potentially the Eastern Mediterranean,” Ambassador Kauzlarich stated. “Nonetheless, the international dimension of the strategy aims at increasing competition in a market that traditionally was dominated by Russian pipeline gas.”
Exporting natural gas is likely to be a growth industry, as global demand for natural gas is expected to be 50 percent higher by 2035 than it is now, according to the International Energy Agency. Demand for imports of LNG increased 27 percent in the United Kingdom last year alone.
The Obama administration largely opposed exporting liquefied natural gas to Europe on environmental grounds before reversing position in late 2014 after Russia annexed Crimea. Europe was initially hesitant to rebuke Russia’s annexation of the Crimean peninsula because of its control over natural gas pipelines and worries that Russia would cut off Europe’s supply. After five years of debate, the first shipments of American liquefied natural gas were shipped to Europe in January.
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