Why U.S Is Opposed to the export of Russian Gas to Europe?

[nehad ismail + 6]

Russia currently supplies about 40% of the EU's gas supplies - just ahead of Norway, which is not in the EU but takes part in its single market.

On 8^th January 2020 Russia and Turkey opened the TurkStream pipeline to supply Russian gas to Turkey and Europe through the Black sea and bypassing Ukraine. When it becomes fully operational, it should carry 31.5 billion cubic metres each year. Turkey will take 50% and the rest is shared between Greece, Hungary North Macedonia, Bulgaria and Siberia.

“TurkStream extends Russia’s dominance in gas supplies to Turkey and southeaster Europe and bypasses Ukraine, with which Russia has strained relations since the annexation of Crimea in 2014” according to Oil Price.Com’s Tsvetana Paraskova - Jan 08, 2020.

No doubt this gas pipeline will further tighten Russia’s grip over the gas supply to Europe.

In 2018, Russia exported 243 billion cubic meters (bcm) of gas through pipelines. The country also exported 24 billion cubic meters of LNG; liquefied natural gas. In comparison, Norway exported 6.6 billion cubic meters of LNG.

Brussels imported 194 billion cubic meters of Russian gas during 2017. Russia has been selling its natural gas for around $4.50 per million thermal units which is significantly lower than alternative sources. This fact alone might undermine the US efforts to get its LNG to Europe.

Already Russia is supplying gas through its Nord Stream Pipeline which runs via the Baltic Sea to Germany, and a second line known as Nord Stream 2 which will be completed before end of 2020.

The original Nord Stream carries 55 bcm a year whereas Nord Stream 2 is expected to carry twice as much gas

 The controversial Nord Stream 2

Nord Stream 2 is a 1,230-kilometer (764-mile) undersea pipeline that will carry natural gas from fields in Russia to the EU network at Germany’s Baltic coast. It will double the capacity of an existing undersea route -- the original Nord Stream -- that opened in 2011. Russia’s Gazprom PJSC owns the project, with Royal Dutch Shell Plc and four other investors including Germany’s Uniper SE and Wintershall AG providing half of the 9.5 billion-euro ($11 billion) in cost

To complicate an already complex issue further,  in 2018 The Southern Gas Corridor an EU sponsored project is bringing gas from Azerbaijani gas field under the Caspian Sea thru Turkey to Europe and is supposed to reduce Europe’s dependence on Russian gas. It carries 120 BCM thru Turkey, Greece, Albania and Italy. The recently opened TurkStream pipeline has not been welcomed by the U.S. to say the least.

 Why the US is alarmed?

The US is alarmed by Europe’s reliance on Russian gas and view the Russian pipeline projects as invasion by gas.

In May 2018 President Trump criticized Angela Merkel the German Chancellor for supporting Russia gas project Nord Stream 2.  Germany, as far as Trump is concerned, is captive to Russia because it’s getting so much of its energy from Russia” Trump said.

 In December 2019 the U.S imposed sanctions on companies helping Russia’s gas giant Gazprom to complete the Nord Stream 2 project. The American steps came too late to hinder the project. According to latest reports the Nord Stream 2 pipeline is expected to come on stream by the end of the year. Russia’s Energy Minister Alexander Novak said in December last year that Gazprom would launch Nord Stream 2 by the end of 2020.

In June last year, Senator Ted Cruz summed up American attitude toward Nord Stream 2 saying it “poses a grave threat to the national security of the United States and our European allies.” Urging NS2′s construction to be halted, he said “the United States must stand with our European allies, support energy diversity, and combat Russia’s economic blackmail”.

According to the London Financial Times “the US ambassador to Berlin has defended US sanctions against the Nord Stream 2 pipeline designed to supply the EU with Russian gas as “extremely pro-European”, but Berlin condemned the legislation as “interference” in its internal affairs and Moscow threatened to “respond.” Richard Grenell was speaking as Allseas, the Swiss company that is Nord Stream’s main contractor, said it had suspended work on laying the pipeline”. 

 

Russia’s point of view: 

Trump’s complaints are motivated by his wish to promote "the interests of his business" to sell American liquefied natural gas to Europe. Merkel has defended the "economic aspects" of Nord Stream 2 and says she’s determined to make sure Ukraine isn’t "fully cut off from transit traffic."

President Donald Trump was critical of the Russian gas projects since his meeting with Jean Claude Junker the ex-president of the EU commission in July 2018.  At the time, Trump boasted that the Europeans want to buy US gas.

“They want very much to do that, and we have plenty of it,” Trump said, referring to the U.S. shale boom, which has unleashed record supplies of the heating and power-plant fuel. “They will be a massive buyer, and they will be able to diversify their energy supply.”

Yet LNG imports to Europe are poised to rise almost 20 percent by 2040 from 2016 levels, according to International Energy Agency. While Russia has long been the region’s top supplier, it’s now facing significant challenges from both the U.S. and Qatar.

 

nehad ismail

Middle Eastern Affairs particularly Oil and Economic Issues