US urged to export more LNG in response to Russia-Ukraine crisis

An American Petroleum Institute official and two Republican US senators separately called for accelerated US LNG exports in response to the Russian-Ukrainian confrontation over control of the Crimean Peninsula.

“Our allies in Europe are eager for a reliable partner to enter the marketplace as a stable, secure source of natural gas, and American industry is ready to make that happen,” API Industry and Upstream Operations Director Erik Milito said on Mar. 5.

“Thanks to the US energy revolution, America is now the world’s leading gas producer, which means that our LNG exports could significantly strengthen the global energy market against crisis and manipulation,” he said, adding, “That’s a win-win for our economy and for our friends.”

The US Department of Energy is required under federal law to determine whether LNG exports from a proposed terminal would be in the national interest. Such facilities also must get approvals from the Federal Energy Regulatory Commission and state regulators.

Milito said the slow pace of federal approval for domestic LNG export facilities has unfortunately stalled infrastructure construction, weakening the US competitive position.

Outlines benefits

“Accelerating that regulatory process would not only reduce our trade deficit and create jobs here in the US, [but also] would bolster the geopolitical power of the US and provide security to our allies,” he said.

A day earlier, US Sens. John A. Barrasso (R-Wyo.), a member of the Energy and Natural Resources Committee, and James M. Inhofe (R-Okla.), urged the Obama administration to expedite the approval process for US LNG exports to Ukraine and other allies.

“While the White House is considering how to support Ukraine, one of the best steps it can take is to help end their dependence on Russian energy,” Barrasso said on Mar. 4.

“In 2006 and 2009, [Russian President] Vladimir Putin used natural gas as a political weapon against Ukraine,” he continued. “Today, Gazprom—Russia's state-owned energy giant—threatened to raise gas prices on Ukraine.”

Discontinuing discount

Gazprom announced on Mar. 4 that it would remove a discount on gas it sells Ukraine beginning in April because the country has not paid for supplies it received in 2013 and the first 2 months of 2014. Ukraine agreed late last year to pay what it owed and keep its payments current to receive the discount, the Russian national gas company said.

“Gazprom hasn’t received any payments for the gas supplied in January, and our Ukrainian partners informed us yesterday that they would not be able to pay in full for the gas supplied in February,” Gazprom Managing Committee Chairman Alexey Miller said.

Inhofe said he has called on DOE to accelerate its national interest reviews for some time, and has joined Barrasso in sponsoring legislation to urgently approve LNG exports that promote US security interests.

“Ukraine imports 50% of its gas from Russia, and Europe imports roughly 30%,” he noted. “It’s clear any serious plan from the United States to respond to Russia’s aggression must go straight at the heart of Russia's economy—energy.”

Contact Nick Snow at nicks@pennwell.com.

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