Biden pledges continued US support for Baltic States' energy progress

Sept. 5, 2016
US Vice-President Joseph R. Biden Jr. applauded the three Baltic nations' recent energy diversification progress and pledged continued US support for Latvia, Lithuania, and Estonia.

US Vice-President Joseph R. Biden Jr. applauded the three Baltic nations' recent energy diversification progress and pledged continued US support for Latvia, Lithuania, and Estonia. "Not long ago, this region was known as the 'energy island,' cut off from the rest of Europe. And the Baltic States know as well as any nation the national security consequences of being energy dependent," he said during an Aug. 24 address at the National Library of Latvia in Riga.

"But recently, you've made significant progress in diversifying your energy sector to ensure you are no longer dependent on any one nation," Biden said. "Here in Latvia, you've taken important steps to liberalize your gas sector, which will allow the formation of a fully integrated regional market in the Baltics. And with the inauguration of Lithuania's LNG terminal-appropriately named 'Independence'-you took a huge leap forward to end the Baltic region's energy reliance on Russia."

Biden said the three countries' progress since the Soviet Union's collapse is impressive, but added that there's more work to be done. "It's important you follow through on your efforts to diversify energy supplies and increase connections to Europe so that no country can use energy to undermine your sovereignty. And the time to act is now, because this is a transformative moment in global energy markets," he stated.

The vice-president's remarks came more than a year after Lithuania's ambassador to the US told a Washington audience that US policymakers must move more aggressively to export more oil and gas so European nations can continue reducing their dependence on Russian supplies (OGJ Online, June 11, 2015). "We need LNG from America now," Zygimantas Pavilionis said. "We can't wait another 10 years."

Diversification will be the key, Latvian Economic Affairs Minister Dana Reizniece-Ozola said a month later at a Washington breakfast briefing hosted by LNG Allies. Russian gas giant Gazprom is using its still-dominant position to hold onto operations in other Eastern European countries as well as hers, she said.

More suppliers needed

"We have long-term supply agreements, which are good. But we pay more-up to 40% at some times of the year-for gas than, say, Germany," Reizniece-Ozola said. "It's imperative that discussions take place to bring more gas suppliers to Europe."

North America will be the world's energy epicenter for the 21st century, partly due to its abundance of gas, Biden said. "We've moved from anticipating massive imports of [LNG] to becoming the world's fastest-growing exporter," he told his audience in Riga. "For the first time, gas from the US is being used here in Europe. And every country in Europe can now buy that American resource.

"That's critical, because Europe needs diverse sources of gas-not new pipelines that lock in greater reliance on Russia," Biden said, an apparent reference to the 1,200-km Nord Stream 2 pipeline project that Gazprom and two German firms began to build in 2010 across the Baltic Sea from Vyborg, Russia, to Greifswald, Germany (OGJ Online, Apr. 9, 2010).

The two offshore pipelines have a combined 55 billion cu m/year capacity, with the first going into operation in November 2011 and the second in October 2012. Both bypass the Baltic States and Eastern Europe.

"Russian gas can and should be part of the European market, but that market needs to be open and competitive," Biden said. "Everyone has to play by the rules. So we're eager to continue working with our partners to help the region secure the energy future you deserve."

'Stability and security'

Officials from US associations that promote more LNG exports from this country to Europe separately expressed their approval of Biden's remarks. "America's growth in gas production means that through LNG exports, we can give our allies stability and security in the global natural gas market," American Petroleum Institute Executive Director for Market Development Martin J. Durbin said on Aug. 25.

"America's shale revolution is growing our economy, spurring environmental improvements, and strengthening our own energy security. US LNG will give our allies an opportunity to achieve those some goals," he noted.

Fred H. Hutchison, executive director of LNG Allies and Our Energy Moment, said that Biden, "as he often does, hit the ball out of the park on this one."

Hutchison told OGJ, "As he noted, US LNG exports are beginning in earnest and will expand greatly in the next few years. On the receiving end, LNG import terminals in Lithuania and Poland are now operational and the requisite interconnecting pipelines are either in place or under development."

He said, "All that remains-and of course, this is where the real challenge lies-is to hammer out firm commercial agreements benefiting both sides. Fortunately, there are lots of serious negotiations under way. We remain very optimistic that some positive announcements are forthcoming. After all, we see the US as the low-cost LNG provider for many years to come."

About the Author

Nick Snow

NICK SNOW covered oil and gas in Washington for more than 30 years. He worked in several capacities for The Oil Daily and was founding editor of Petroleum Finance Week before joining OGJ as its Washington correspondent in September 2005 and becoming its full-time Washington editor in October 2007. He retired from OGJ in January 2020.