GGP: US gas exports not the elixir to European energy security

The statements, opinions and data contained in the content published in Global Gas Perspectives are solely those of the individual authors and contributors and not of the publisher and the editor(s) of Natural Gas World.

The following was originally published by the The Hill on June 23, 2017.

Efforts by the White House and Congress to accelerate U.S. natural gas exports will likely benefit domestic companies, create jobs and strengthen trade ties abroad. However, policymakers need to be realistic about the limited ability of gas exports to strengthen the energy security of U.S. allies, especially in Eastern Europe. As leaders look to expand exports, they cannot lose sight of the continued need to promote traditional energy security policies.

The U.S. shale revolution has led to increased calls in Congress and from the private sector to fast-track the permitting process for natural gas (or LNG) exports. Most recently, Senators Bill Cassidy (R-La.) and Ted Cruz (R-Texas) introduced legislation to remove many long-standing export restrictions.

In reality, permitted volumes have outpaced actual contracts for gas, showing that the permitting process has not necessarily prevented gas from reaching markets that desire the imports. But that shouldn’t be taken to mean that there isn’t more export opportunity: Demand for gas usually increases with the availability of secure supplies. Thus, continued and simplified permitting of additional U.S. gas exports is likely to drive up global demand. 

Currently, these exports must meet a “public interest” criteria. However, approval has been automatically granted to countries that have free trade agreements with the U.S. A number of nations in Asia and the Pacific Rim were set to be included in this group as part of the Trans-Pacific Partnership (TPP).

With the cessation of the TPP, the Trump administration’s efforts to promote gas exports could fill the permitting gap. Legislation to facilitate exports could also make it easier to sell into countries such as China, where the U.S. is unlikely to have free trade agreements anytime soon.

Many proponents of fast-tracking have argued that it holds foreign policy benefits, especially for allies in Eastern Europe that are dependent on gas from Russia. In actuality, few of these states would benefit from increased U.S. exports.

For one, most are landlocked and thus unable to import U.S. LNG, which is supplied by sea. Those that do have sea access, like Ukraine, are unlikely to be able to afford the U.S. gas, which is generally much higher priced than piped-in gas from regional providers. Even Lithuania, which opened an LNG facility named Independence to emphasize its national security value, is now negotiating with Gazprom to increase its Russian gas imports, due to the lower price.  

As another example, Poland’s prime minister said the arrival of the first U.S. LNG shipment “will be noted in future history books.” But, in actuality, it does little to change the energy or national security situation in Poland, where natural gas comprises about 10 percent of the fuel mix and only four percent of Poland’s electricity generation, which is generally the most critical sector for energy security.

For Eastern European nations to strengthen energy security — and thus, national security — traditional tools are most likely to be successful — diversification of energy sources, building of gas storage, dual-fuel capacity of power plants and more. For this reason, the U.S. should not allow exuberance over increased gas exports to distract from the critical need to continue partnering with Europe in strengthening traditional energy security efforts.

Brenda Shaffer is a specialist on energy and foreign policy. She is a visiting researcher and professor at Georgetown University’s Center for Eurasian, Russian and East European Studies and a senior fellow at the Atlantic Council’s Global Energy Center. She is the author of  several books, including "Partners in Need: the Strategic Relationship  of Russia and Iran" and "Energy Politics".

The statements, opinions and data contained in the content published in Global Gas Perspectives are solely those of the individual authors and contributors and not of the publisher and the editor(s) of Natural Gas World.