Europe getting duped with U.S. LNG, Kremlin says

European leaders have said natural gas from U.S. shale basins offers an alternative to Russian supplies.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |  Dec. 15, 2017 at 7:16 AM
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Dec. 15 (UPI) -- Under the guise of diplomatic force on the Kremlin, Washington is pressuring European allies to buy overpriced natural gas, Russia's foreign minister said.

Russian Foreign Minister Sergei Lavrov said European leaders in Brussels are taking orders from "across the pond" and sanctioning entities that harm Russian business interests.

"The Americans themselves did not incur losses," he was quoted by Russian news agency Tass as saying. "Moreover, under the pretext of fighting Russia, they want to push Europeans to buy overpriced American liquefied natural gas, and ramp up defense spending."

The European energy sector is exposed to geopolitical risk from its network of pipelines extending from Russia. Some of those networks run through the former Soviet sphere of influence, like in Ukraine where simmering conflicts add to energy security concerns in the European market.

Looking for options because it has few resources of its own, European leaders have said liquefied natural gas sourced from shale basins in the United States could be a source of diversity.

Polish Oil and Gas Co., known commonly as PGNiG, signed a five-year contract to secure LNG from the Sabine Pass terminal in Louisiana, the first mid-term contract of its kind, in November.

U.S. Sen. Bill Cassidy, R-La., a member of a Senate energy committee, said the deal played "an important role in reducing Russian President Vladimir Putin's ability to bully Europe."

A National Defense Authorization Act for the current fiscal year that passed out of the U.S. House of Representatives in November said Russia uses energy "as a weapon to coerce, intimidate and influence" countries in the region. A pro-energy former real estate tycoon, U.S. President Donald Trump is expected to release his National Security Strategy on Monday.

A 2016 study from the Oxford Institute for Energy Studies finds Russian energy company Gazprom could compete with LNG from the United States if it decided to engage in a price war. The study at the time said the price for Russian gas exported through pipelines to Europe was discounted to U.S. LNG by as much as $1 per million British thermal units.

A report from commodity pricing group S&P Global Platts from early this year said 2016 gas prices in Europe were too low to support U.S. LNG imports. The report added, however, that contracts from companies like Gazprom may have been "tinkered with" to make piped gas more competitive.

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