Unleashing American energy: Trump’s visit to Poland

Reuters reported that Trump “will 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”.

US Republican lawmakers, many of whom are anti-Russian hardliners, support using gas exports for political leverage. It’s the battle of pipelines versus LNG cargo ships.

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

The Kremlin relies heavily on oil and gas revenue, so taking market share from the Russian state energy giant Gazprom, would hurt Moscow.

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

US Energy Envoy Amos Hochstein has called for “greater competition” with Russia’s Gazprom through increased LNG imports to Europe. “You are condemning Eastern and Central Europe to another 30 – 50 years of dependency on one supplier,” Hochstein told EURACTIV Slovakia.

Norway, incidentally provides nearly two-thirds of UK gas imports via pipelines, but no one is complaining that Norways entertains a “political” project. But as Miguel Arias Cañete, Europe’s climate action and energy commissioner, pointed out, Nord Stream 2 “is a project that has huge political consequences”.

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. US exporters have sold most of that gas in long-term contracts, but there are still some volumes on offer, and more export projects to come they say. The latest BP Statistical Review however suggests that surging renewable supplies could push gas demand down further in the future.

An energy analyst on the Johannesburg Stock Exchange told FWM that LNG contracts are offered for a five year term with a cargo ship included for free.

This year the EU’s legal services department decided that EU energy laws did not apply to the Russian Nord Stream 2 pipeline. Germany’s network regulator agreed with that assessment, dashing the hopes of those who had wanted to legally block the project.

Five European energy companies will each pay €950m to fund a new Gazprom gas pipeline as part of a finance package that clears a significant hurdle for a project that has faced strong resistance from some EU member states. Anglo-Dutch group Royal Dutch Shell, Austria’s OMV, France’s Engie and Germany’s Uniper and Wintershall will each provide loans covering 10 per cent of the €9.5bn cost of the pipeline, with Gazprom providing the remaining 50 percent, The Financial Times reported.

Nord Stream 2 is highly geopolitically gabapentinoral.com contested by the US and Poland, for it could decrease Russia’s dependence on using Eastern European countries as paid thoroughfares. But even without Nord Stream 2, Gazprom’s ownership of European gas markets has been rising steadily. It reportedly increased from 31 percent in 2015 to 34 percent last year, according to Bloomberg.

In a press release on Gazprom’s website, the company noted: “The new gas pipeline, Bovanenkovo-Ukhta-2, commissioned today as part of the northern gas transmission corridor, reshapes the geography of gas flows for both domestic supplies and exports. The northern corridor becomes fundamental to gas supplies throughout European Russia and integral to the shortest, most reliable and efficient new route for gas exports to Europe, stretching from Yamal to Germany across the Baltic Sea. It is the Nord Stream 2 project, whose implementation is running on schedule.”

The pipeline is designed to deliver an estimated 55 billion cubic meters of Russian natural gas a year to Germany across the Baltic Sea, bypassing Ukraine.

In 2016, prime ministers of Czech Republic, Estonia, Hungary, Latvia, Poland, Slovakia and Lithuanian president signed a letter addressed to European Commission President Jean-Claude Juncker, objecting to construction of Nord Stream 2 pipeline, since the project could allegedly result in “geopolitical destabilisation”, the Polish news agency PAP reported.

The former Polish Prime Minister Jerzy Buzek, now Chair of the Industry Committee of the European Parliament, claimed that Nord Stream 2 and the EU Energy Union could not coexist, while Polish Maritime Economy Minister Marek said the German-Russian gas pipeline goes against the concept that what is not beneficial for all European Union countries cannot be beneficial for any single country, in speaking to Polish Radio.

According to experts from Poland’s Centre for Eastern Studies (OSW) think-tank, “the project is not consistent with the objectives of the Energy Union, because it does not give access to new sources of gas, and strengthens the position of Russia as the largest supplier in the European market”.

But Berlin maintains that Nord Stream 2 is a straightforward commercial venture in which neither the EU or the US should interfere. The project would establish Germany as an entrepot in the European gas market, replacing the declining gas production from the Dutch and British sectors of the North Sea.

“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 closely to see whether Trump clarifies his administration’s position on the new pipeline at the Trimarium gathering.

“Some things the Europeans need to decide for themselves,” Peter Wittig, the German ambassador to the US, told reporters last month in Washington, adding that the Americans have “taken up some of the fears of other European countries”.