Opportunity for Netherlands as Europe Seeks Gas Alternatives

Rotterdam’s ability to gasify LNG could help Europe reduce its dependence on Russia.

Vladimir Putin’s aggression in Ukraine has prompted European countries to rethink their dependence on Russian natural gas.

The Netherlands, still Europe’s second largest gas producer, could play a key role in diversifying the continent’s energy supply, but much hinges on America’s willingness to export.

Dependence on Russia

Former Russian satellite states in Eastern Europe are almost wholly dependent on Russian oil and gas.

Germany and Italy get around a third of their gas from Russia.

Half of Russia’s gas exports to Europe flow through Ukraine, where Western countries believe it is supporting a separatist uprising in an attempt to divide the country and weaken a government in Kiev it perceives as hostile.

Russia earlier invaded and annexed the Crimean Peninsula, which had been part of Ukraine since 1954.

Moscow’s wrath

Although the European Union has imposed sanctions on Russians who are believed to be close to Putin’s regime, its member states hesitate to sever ties with Moscow altogether.

Twice in recent years has Russia turned off the gas supply to Ukraine amid price disputes, leaving parts of Central Europe literally in the cold during winter.

American exports

The Americans complain that Europe’s response to Russian aggression isn’t forceful enough, yet they have so far shied away from making the decision that could give their allies some comfort: increasing natural gas exports to Europe.

Natural gas production in the United States has risen dramatically thanks to horizontal drilling and hydraulic fracturing. The country is due to overtake Russia as the world’s largest natural gas producer this year. Gas prices in America are a third of what they are in Europe.

Yet exports have hardly increased due to a 1970s law that requires the Energy Department to approve each export proposal separately and assess whether it would be in the “national interest.”

Influencing Russian decisionmaking

Although it would take years to build the necessary infrastructure and sign contracts for more transatlantic gas exports, overturning the law would not only give European countries more leeway in their dealings with Russia; it could also influence Russian decisionmaking today.

Hydrocarbons account for 70 percent of the country’s exports and provide more than half the state’s income. The prospect of a challenge to Russia’s natural gas hegemony in Europe could make it more susceptible to Western demands.

Role for the Netherlands

The Netherlands could play an important part in such a strategy as it hosts one of the few terminals in Western Europe that can gasify liquified natural gas.

The Gate (“Gas Access to Europe”) terminal came online in 2011 but currently operates at 10 percent capacity.

It was built to preserve the Netherlands’ position as a pivotal distributor of natural gas in Europe. The country’s own supplies are running thin. The International Energy Agency predicts it may have to import gas in under a decade.

Little wonder Prime Minister Mark Rutte calls for the rapid ratification of a transatlantic free-trade agreement that could pave the way for more American energy exports. His country’s energy security depends on it.