Russia’s Crimea Invasion Rekindles American Gas Export Debate

By exporting more natural gas to Europe, America could help make its allies less dependent on Russia.

The LNG carrier Arctic Lady off the coast of Norway, June 11, 2012
The LNG carrier Arctic Lady off the coast of Norway, June 11, 2012 (Amanda Graham)

Russia’s invasion of the Crimea has rekindled a debate in the United States about exporting natural gas to Europe. Proponents say that by lessening the continent’s dependence on Russian supplies, it could become more comfortable taking a stand against President Vladimir Putin’s aggression.

“Russia’s neighbors need large quantities of natural gas — and, currently lacking a better option, they buy much of it from Russia,” the Republican leader in Congress, John Boehner, argued in The Wall Street Journal on Thursday. “This dependence has diplomatic repercussions,” he warned, “making them more reluctant to challenge some of Mr Putin’s arrogant actions.”

The conservative newspaper itself had earlier argued that “exporting more would be a win for the US economy and global interests.”

The New York Times, a leftist paper that tends to be more critical of the oil and gas industry, agreed, writing, “Increasing natural gas exports could serve American foreign policy interests in Europe.”

Former Russian satellite states in Eastern Europe are almost wholly dependent on Russian oil and gas. Germany, Europe’s largest economy, gets more than a third of the gas it consumes from Russia. Russia similarly provides more than 30 percent of the gas Italy imports. About half of Russia’s gas exports to Europe flow through Ukraine.

France is the only major continental power that is largely independent of Russian supplies. Its nuclear power plants account for around 75 percent of the country’s electricity generation.

Oil and natural gas production in the United States has risen dramatically in recent years thanks to horizontal drilling and hydraulic fracturing. The country is due to overtake Russia as the world’s biggest natural gas producer this year and expected to overtake Saudi Arabia as the world’s largest oil producer in 2015. As a result, gas prices in America are just a third of what they are in Europe.

Yet gas exports have hardly increased as a 1970s ban requires the Energy Department to approve each export proposal individually and assess whether it would be in the “national interest.”

As Boehner pointed out, only six such proposals have been approved in the last three years while more than twenty applications are pending. “This means Washington is doing as little as possible in an area in which we should be doing the opposite,” he wrote.

Although European leaders threatened sanctions on Thursday unless Russia entered negotiations with the new authorities in Kiev over the Crimea’s status — which requested annexation by Russia earlier that day — they hesitate to sever ties with Moscow altogether. An increase in American gas exports could ultimately give them more leeway and would also make Ukraine less vulnerable to Russian economic pressure. It relies on Russia for about 70 percent of its gas supplies.

It would take years to build the necessary infrastructure and sign contracts for more transatlantic gas exports but the mere promise could influence Russian decisionmaking today, advocates believe. Oil and gas account for 70 percent of the country’s exports and provide more than half of the Russian state’s income. The prospect of a challenge to Russia’s natural gas hegemony in Europe could make it more susceptible to Western demands.

Officials have shied away from making concrete promises but President Barack Obama’s energy secretary, Ernest Moniz, said on Wednesday he would “certainly welcome consultations in terms of how to go forward.”

Carlos Pascual, a former American ambassador to Ukraine who now leads the State Department’s Bureau of Energy Resources, told The New York Times that while the prospective American exports would not immediately solve the problems in Europe, “it sends a clear signal that the global gas market is changing, that there is the prospect of much greater supply coming from other parts of the world.”

Russian troops entered the Crimea in late February after Ukraine’s elected president, Viktor Yanukovich, was deposed following months of protests against his decision to pull out of an associated agreement with the European Union in favor of deeper ties with his country‚Äôs former Soviet master, Russia. Russia has denied sending troops but President Putin said on Tuesday he could use force as a “last resort” to protect Russian speakers and Russian interests in eastern Ukraine.

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