Page 4 - FSUOGM Week 07 2020

FSUOGM COMMENTARY FSUOGM
US seeks to carve out
space for LNG in Europe
A single gas market is not only good news for Europe, but also for US LNG suppliers
EUROPE
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, and the Ionic Adriatic Pipeline (IAP), slated to run through the Balkans.
“Our aim is quite simple: it is to galvanise 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- opment Finance Corp. (IDRC), with support from the US Congress.
Russia’s state gas exporter Gazprom asserted its dominant position in Europe over the years in
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