Lugar seeks free-trade LNG export footing for NATO allies

(Story updated with background, comments from Atlantic Council seminar)

Richard G. Lugar (R-Ind.), the Senate Foreign Relations Committee’s ranking minority member, introduced legislation to place other members of the North Atlantic Treaty Organization on the same footing as US free trade partners when it comes to receiving LNG exports.

“Lack of diversity in natural gas supplies to NATO allies and friends is a critical concern for US national security interests,” Lugar said. He said, “vigorous US diplomacy can be coupled with allowing free trade” for US exports of LNG. “Now is the time to dramatically shift gas markets to blunt the temptation for political manipulation of supplies by Russia and Iran.”

The bill stems from a report, “Energy and Security from the Caspian to Europe”, which Lugar released Dec. 12. Senate Foreign Relations Committee staff members prepared the report, which outlines rationale to diversify Eastern Europe’s gas supplies with LNG exports.

The report also calls for stronger US engagement on the completion of the next stage of the Southern Gas Corridor, which aims to supply Europe with gas from Caspian and Central Asian nations.

“The United States with our European allies have an unprecedented opportunity to advance broad natural gas diversification,” the report said. “The Southern Corridor is vital for such a strategy in Central and Southeastern Europe and Turkey.”

The report urges US officials advocate developing the Nabucco West gas pipeline—which would bypass Russia—in delivering gas to Central and Eastern Europe from the Caspian and Central Asian region. Nabucco West would extend from the Turkish-Bulgarian border to Baumgarten in Austria.

The original Nabucco gas piepline project was announced in 2009 but has faced significant delays, the report said. Meanwhile, the Turkish and Azerbaijani government put forth their own proposal, the Trans-Anatolian Pipeline, in 2011 to replace the Nabucco project's portion in Turkey. A final decision has yet to be made.

Turkey and Azerbaijan agreed earlier this year to build the Trans-Adriatic Pipeline, which could potentially deliver Azeri gas to Nabucco West (OGJ Online, June 28, 2012).

Study's authors elaborate

Neil Brown, a staff member from the US Senate’s Foreign Relations Committee, said the US needs to continue supporting the Southern Corridor.

“We should resist the temptation to declare victory and move on,” Brown told an Atlantic Council seminar in Washington, DC, on Dec. 18.

Marik String, the committee’s chief council, said that building a southern alternative to Russia’s pipelines makes sense despite skeptics’ arguments.

“Azerbaijan again has said that it is interested in exporting gas to Europe, no matter which project is built first,” String said.

The study's authors support the Nabucco West proposal, String said, adding that "either approach makes sense."

David Koranyi, deputy director of the Atlantic Council's Patriciu Eurasia Center, said the US shale boom has made Europe exercise more robust energy diplomacy. Moving Nabucco West forward would include more companies in the consortium and would encourage Turkey and Azerbaijan to participate with the European energy community, he said.

"Azerbaijan shoudl be able to supply most of Nabucco West's initital demand, but I'm skeptical about other aspects, particularly major shipments from Turkmenistan since China plans to build its own pipeline from there," Koranyi said.

Brown and String said US energy diplomacy potentially could be affected by the Obama administration's plans to eliminate the chief energy envoy's position in the US Department of State.

Contact Nick Snow at nicks@pennwell.com.

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