Trump to Promote US Natural Gas in Eastern Europe to Reduce Allies’ Energy Dependence on Russia

US President Donald J. Trump greets guests at the White House in Washington, DC, USA, 04 July 2017. The president was hosting a picnic for military families for the July 4th holiday. Photo: Zach Gibson/Pool/EPA/REX/Shutterstock

  • US President Trump is heading to a ‘Three Seas’ Summit in Warsaw to promote US liquefied natural gas (LNG) exports to Eastern Europe.
  • Trump thus hopes to use booming US LNG production as a geopolitical tool vis-à-vis Russia.
  • Eastern Europe has been largely dependent on Russian natural gas supplies.
  • In June, Poland received its first LNG delivery from the US.
  • Global glut is depressing prices and might make it difficult for US LNG supplies to make a breakthrough.
  • Rift with Germany is emerging as the US is opposed to the Russian sponsored Nord Stream 2 pipeline.

US President Donald Trump is going to a summit in Warsaw, Poland, in order to try to kill two birds with one stone: promote US natural gas among America’s Eastern European allies to find new clients for US LNG exports while reducing the region’s energy dependence on Russia.

The development comes amid the ongoing standoff between the West and Moscow over Russia’s annexation of Ukraine’s Crimean Peninsula back in 2014, and the ongoing pro-Russian insurgency in Ukraine’s Donbass region since then.

Eastern European NATO and EU member states’ have been well-known for being heavily dependent on Russia for energy resources such as natural gas, partly a legacy from the Soviet Bloc and the Cold War era.

Some of those, such as Bulgaria, are over 90% dependent on Russian natural gas supplies.

In recent years, Moscow has cut off gas shipments during pricing disputes with neighboring countries in winter months.

‘Three Seas’ Project

US President Donald Trump is to use fast-growing supplies of US natural gas as a political tool when he meets in Warsaw on Thursday with leaders of a dozen countries that are captive to Russia for their energy needs, Reuters reported.

Exports from the United States would help reduce their dependence on Russia.

Trump will tell the group that Washington wants to help allies by making it as easy as possible for US companies to ship more liquefied natural gas (LNG) to central and eastern Europe, the White House said.

Trump is going to attend the so called “Three Seas” summit – so named because several of its members surround the Adriatic, Baltic and Black Seas – before the Group of 20 leading economies meet in Hamburg, Germany, where he is slated to meet Russian President Vladimir Putin for the first time.

Among the aims of the Three Seas project is to expand regional energy infrastructure, including LNG import terminals and gas pipelines. Members of the initiative include Poland, Austria, Hungary, and Russia’s direct neighbors Latvia and Estonia.

Trump’s presence will give the project a lift, said James Jones, a former NATO Supreme Allied Commander, adding that increased U.S. gas exports to the region would help weaken the impact of Russia using energy as a weapon or bargaining chip, said Jones.

“I think the United States can show itself as a benevolent country by exporting energy and by helping countries that don’t have adequate supplies become more self-sufficient and less dependent and less threatened,” he said.

‘Export American Energy’

In a speech on 29 June, Trump declared the start of a “golden era” that would see the US energy business assert its power abroad through a boost in natural gas, coal and oil exports, EurActiv reminds.

“We are here today to unleash a new American energy policy. We will export American energy all around the world,” Trump said at an event at the Department of Energy.

In what he called a policy of “energy dominance”, Trump re-branded efforts to export LNG to markets in Eastern Europe and Asia that had been set in motion during the previous presidential administration.

“We’re going to be an exporter. […] We will be dominant.  We will export American energy all over the world, all around the globe. […] The golden era of America is now underway.  Believe me,” Trump said.

The gas tanker vessel ‘Al Nuaman’ with Qatari LNG enters the LNG Terminal Port in Swinoujscie, Poland. 17 June 2016. Photo: Marcin Bielecki/EPA/REX/Shutterstock

‘Most Threatening US Policy’

Trump’s Russia policy is still taking shape, Reuters says, noting that the process has been made awkward by investigations into intelligence findings that Russia tried to meddle in the 2016 US presidential race.

Hardliners in Trump’s Republican Party want tougher actions on Russia because of its interference in the election and the wars raging in Ukraine and Syria, and support using gas exports for political leverage.

“It undermines the strategies of Putin and other strong men who are trying to use the light switch as an element of strategic offense,” said Senator Cory Gardner, a Republican from Colorado who is on the Senate Foreign Relations Committee.

The Kremlin relies on oil and gas revenue to finance the state budget, so taking market share would hurt Moscow.

“In many ways, the LNG exports by the US is the most threatening U.S. policy to Russia,” said Michal Baranowski, director of the Warsaw office of think-tank the German Marshall Fund.

The US is expected to become the world’s third-largest exporter of LNG in 2020, just four years after starting up its first export terminal.

American exporters have sold most of that gas in long-term contracts, but there are still some volumes on offer, and more export projects on the drawing board.

Cheniere Energy Inc, which opened the first US LNG export terminal in 2016, delivered its first cargo to Poland in June. Five more terminals are expected to be up and running by 2020.

Tellurian Inc has proposed a USD 16 billion project to be completed by 2022, in time to compete for long-term contracts to supply Poland that expire the same year and are held by Russian gas giant Gazprom.

“We would like to be a supplier that competes for that market,” Tellurian Chief Executive Meg Gentle told Reuters.

Global Glut

A global glut in supply may, however, limit US LNG export growth, regardless of Trump’s support, while Russia has the advantage in Europe due to its proximity and pipeline connections.

The glut has depressed prices and made it difficult for LNG exporters to turn a profit, said Adam Sieminski, an energy analyst with the Center for Strategic and International Studies.

“Europe is going to be the great competitive arena between Russian gas and LNG,” said Daniel Yergin, the Pulitzer Prize-winning oil historian and vice-chairman with IHS Markit analysis firm.

Europeans will be watching to see whether Trump clarifies his administration’s position on a new pipeline to pump Russian gas to Germany, known as Nord Stream 2, Reuters comments.

The US Senate in June passed a package of sanctions on Russia, including provisions to penalize Western firms involved in the pipeline. The new sanctions have stalled in the House of Representatives.

The US State Department has lobbied against the pipeline as a potential supply chokepoint that would make Europe more vulnerable to disruptions.

This has created a rift between the US and Germany which supports the pipeline.

1 Comment on "Trump to Promote US Natural Gas in Eastern Europe to Reduce Allies’ Energy Dependence on Russia"

  1. Looming iceberg | July 19, 2017 at 9:04 am | Reply

    The USA is no good ally for Europe. It would be an even-Steven exchange one dependence to another. The consequences of Westinghouse crash for Ukraine and the EU show how risky such dependence would be. https://topbuzz.com/@wdr85056/westinghouse-bankruptcy-threatens-the-eu-nuclear-sector–with-great-hardships-CQKAuCBDZ1k

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