U.S. sees LNG as a way to contain Russia

Russia using its energy resources as a 'weapon to coerce' countries in Europe, a national defense measure states.
By Daniel J. Graeber  |  Nov. 15, 2017 at 6:31 AM
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Nov. 15 (UPI) -- A national defense measure passed in the U.S. House of Representatives aims to promote energy trade in Europe as a means to contain Russia.

The National Defense Authorization Act for the current fiscal year passed out of the House, largely with the support of Republican leadership in the chamber. Seventy members of the full house voted against it.

On energy security, the measure said U.S. efforts should promote energy security in Europe, stating Russia uses energy "as a weapon to coerce, intimidate and influence" countries in the region.

European natural gas production is on the decline, leaving the broader energy market vulnerable to export markets. Russia is the largest gas exporter to Europe and most of that gas runs through Soviet-era pipelines in Ukraine, where geopolitical issues create risk.

Russia accounts for about 40 percent of the gas sent to the European market, followed by Norway with 34 percent. The defense act stated that U.S. efforts should promote European energy security with backing for expansion of its own gas infrastructure, as well as growth of trade in liquefied natural gas.

Shale natural gas from the United States has made its way to the European market in the form of LNG. Polish Oil & Gas, known by its acronym PGNiG, this year closed on a deal to accept LNG from Cheniere Energy, which owns a terminal in Louisiana that's the only one with the permits necessary for current exports of U.S. natural gas.

LNG, which is less exposed to geopolitical risk than piped gas, accounts for only 14 percent of the European market. A special permit is needed to send LNG from the United States to countries without a U.S. free-trade deal, which could pose obstacles for a Trump administration with a protectionist trade stance.

When the U.S. State Department in late October published a list of 39 sanctioned Russian companies and entities, however, Russian Foreign Minister Sergei Lavrov said it was a veiled effort "to elbow Russia out of the energy markets."

European leaders, meanwhile, are working on diversification mechanisms of their own, tightening rules for gas pipeline infrastructure to improve competition. Russian energy company Gazprom controls both the resources and the transit arteries, unsettling European monopoly controls.

Gazprom wants to twin its Nord Stream natural gas pipeline through the Baltic Sea to Germany. When U.S. President Donald Trump signed legislation in support of Russian sanctions in August, Germany energy company Wintershall, which has a role in Nord Stream, said Washington should avoid playing "geopolitical football" in the European energy sector.

Elsewhere, the United States has expressed support for the so-called Southern Corridor, a network of pipeline that would extend from the Shah Deniz natural gas field off the coast of Azerbaijan into Europe.

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