Page 7 - NorthAmOil Week 07

NorthAmOil COMMENTARY NorthAmOil
otherwise be inaccessible. As such, Washing- ton wants to assist the less-connected eastern countries in Europe in developing their gas infrastructure.
The United States Energy Association (USEA) signed a memorandum of understand- ing (MoU) earlier this month with 11 eastern European countries on developing the region’s gas grid. e initiative, known as the Partner- ship for Development of Natural Gas Networks in Eastern Europe (EE-NGP), was set up by the USEA and the United States Agency for Interna- tional Development (USAID) in 2017 with the aim of “facilitating the creation of a regional gas market with potential for US deliveries.”
e other signatories were Albania, Bosnia, Bulgaria, Croatia, Greece, Kosovo, North Mac- edonia, Montenegro, Poland, Romania and Slovakia. Many of these countries rely on Rus- sia to supply almost all their gas, but through interconnection projects, could access LNG from existing regasi cation terminals, or new ones planned or under construction in Croatia, Greece and Poland.
Some of the signatories, such as Albania and Montenegro, are even without gas grids. e completion of the Trans-Adriatic Pipeline (TAP) later this year will see gas from Azerbai- jan owing through Albania en route to Italy, however, potentially encouraging the country to invest in gasi cation. Likewise, the IAP project would provide Montenegro with access to gas from Croatia’s Krk LNG terminal due on stream in 2021 from one direction, and gas transiting Albania on the other. A nal investment decision (FID) on the pipeline is yet to be taken, however.
What next?
While investment in gas infrastructure will help US suppliers to access to new pockets of demand in Europe, some of the suggested opportunities are somewhat outlandish.
Pompeo was also in Belarus earlier this month, pledging to supply the country with as much oil and gas as it needs. is is unrealistic.
Belarus has close economic and political ties with Russia but is currently in a stando with its neighbour over energy supplies. It pays only $127 per 1,000 cubic metres of Russian gas it receives, compared with a European average of $203. e US would be unable to compete with such a low price.
US energy o cials were also in the Monte- negrin port of Bar this month, a er which the port’s operator suggested that a terminal could be built to import US LNG, despite the country’s aforementioned lack of a gas grid. Brouillette also visited Sines in Portugal this month, which already hosts a regasification plant. He sug- gested that the port could serve as a gateway for US LNG arriving in Europe. In reality, though, limited flow capacity at the French-Spanish border means that any extra US gas imported at Sines would mostly be con ned to Portugal and Spain.
Generally speaking, while the US may be able to outcompete Russia for sales in Eastern Europe some of the time, it would struggle to provide consistently cheaper gas. Its opportunities in some countries, especially impoverished ones, may therefore be limited. While supply diversi- cation is an attractive prospect, the priority for most countries will be getting gas as cheaply as possible.
Even so, by supporting the development of European gas infrastructure, the US can poten- tially carve out a greater share of the continent’s gas market for itself. And increased intercon- nection will also bene t consumers in terms of costs and energy security. US funding is likely to be welcomed with open arms by member states, at a time when the European Investment Bank (EIB) and other nanciers are cutting ties with fossil fuels.™
While supply diversi cation is an attractive prospect, the priority for most countries will be getting gas as cheaply as possible.
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