Page 6 - NorthAmOil Week 07

NorthAmOil COMMENTARY NorthAmOil
US seeks to carve out space for LNG in Europe
The US is promoting the rise of LNG shipments to Europe, but while it could displace some Russian gas, the North American country will struggle to remain consistently competitive
GLOBAL
WHAT:
The US has pledged $1bn in support for Central and Eastern European gas infrastructure.
WHY:
Washington wants to create extra room for US LNG supplies.
WHAT NEXT:
The US will be able to target some demand
that was previously inaccessible, while improved interconnection and increased supply options will bene t the European gas market.
US Secretary of State Mike Pompeo used his platform at the Munich Security Conference in Germany to rail against Washington’s adversar- ies China, Iran and Russia. In his forceful speech, aptly titled “ e West is Winning,” Pompeo took aim at Moscow’s Nord Stream 2 pipeline project, while also announcing $1bn of nancing to help Central and Eastern Europe curb its reliance on Russian gas.
e US has adopted a more aggressive stance against Russia’s dominance over European energy markets under US President Donald Trump. is is largely owing to the US’ growing stature as a key LNG exporter.
US LNG exports to Europe surged to 18.3bn cubic metres in 2019 from only 3.7 bcm in the previous year, Eurostat data shows, on the back of higher production and weaker prices in Asia. Overall US LNG sales abroad are projected to continue rising in 2020 and 2021 – up 30% and 18.5% respectively according to the EIA’s fore- casts. To ensure this supply has a home, Wash- ington is eager to keep hold of the market share it seized in Europe last year.
Nord Stream 2
This helps explain Washington’s aversion to Nord Stream 2, a pipeline that will carry 55 bcm per year of Russian gas to Germany once ready.
“When Russia suggests that Nord Stream 2 is purely a commercial endeavour, don’t be fooled,” Pompeo said. “Consider the deprivations caused in the winters of 2006 and 2008 and 2009 and 2015.”
e US imposed sanctions on Nord Stream 2 in late December, forcing Sweden’s Allseas to halt construction with only 6% of the pipeline le to lay. Russia says it can complete the rest using its own pipelaying vessel – a notion that Washing- ton has sco ed at.
US Energy Secretary Dan Brouillette told Bloomberg on February 15 that Russia “can’t” nish the pipeline alone, while dismissing claims that the project would only incur only a short delay. Moscow predicts that Nord Stream 2 will start up in either late 2020 or early 2021, around a year later than planned.
“It’s going to be a very long delay, because Russia doesn’t have the technology,” he said at the same Munich conference. “If they develop it, we’ll see what they do. But I don’t think it’s as easy as saying, well, we’re almost there, we’re just going to nish it.”
Russia has suggested before that Nord Stream 2 could be nished by the Akademic Cherskiy vessel, built at a Chinese shipyard in 2015 and acquired by Gazprom the following year. e ship had been stationed in the Far East but is now bound for Singapore and is due to arrive there on February 22, according to shipping data. News- Base understands it is going there for upgrades.
Unite and conquer
Pompeo announced that the US would provide
$1bn in nancing towards the ree Seas Initia-
tive (TSI), a fund involving 12 EU member states
in Central and Eastern Europe that was set up
in 2016 largely to counter countries’ economic
reliance on Russia. A key focus of TSI is backing
gas infrastructure investments, with the current
roster of projects it supports including a gas
link being built between Poland and Lithuania,
planned LNG terminals in Croatia and Estonia, US LNG exports and the Ionic Adriatic Pipeline (IAP), slated to
run through the Balkans.
“Our aim is quite simply: it is to galvanise
from the US Congress.
Russia’s state gas exporter Gazprom asserted
its dominant position in Europe over the years in part by exploiting national gas markets that are isolated, without alternative sources of supply. is is why the EU has made great e orts during the past decade to establish a single gas market by investing and supporting interconnection projects, in order to improve the bloc’s energy security and reduce costs.
is single gas market is not only good news for Europe, but also for US LNG suppliers, ena- bling them to target gas demand that would
private sector investment in the energy sector
to protect freedom and democracy around the
world,” Pompeo said. He added that the funding
would come from the US’ International Devel- from only 3.7 opment Finance Corp. (IDRC), with support
to Europe surged to 18.3bn cubic metres in 2019
bcm in the previous year.
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w w w . N E W S B A S E . c o m Week 07 19•February•2020