U.S. Sen. Richard Lugar (R-IN) Wednesday said the United States should use its natural gas bounty to export liquefied natural gas (LNG) to NATO countries to help them reduce their reliance on natural gas supplied by Russia and Iran, thereby bolstering U.S. national security.
Lugar announced his LNG for NATO Act, which he said would tweak the export licensing rules for LNG with an eye to boosting national security by diversifying the energy supplies relied upon by NATO allies.
“The United States is in possession of vast resources that could directly contribute to the energy security of our closest NATO allies, who face over-reliance on Russian and Iranian gas sources,” said Lugar, who is the ranking member on the Senate Committee on Foreign Relations. “In 2009, the United States overtook Russia as the world’s largest natural gas producer due to vast unconventional reserves. At current U.S. consumption rates, the United States possesses perhaps a century of gas supply.”
Exports of LNG to countries with which the United States has a free trade agreement (FTA) are presumed to be in the public interest and are routinely approved by the U.S. Department of Energy. Seventeen applications for export to FTA countries have already been approved. However, exports to non-FTA countries must be reviewed and determined to be in the public interest before they are approved. Only one planned U.S. LNG export project has such clearance: Cheniere Energy’s Sabine Pass terminal in Louisiana.
Lugar’s legislation would amend Section 3 the Natural Gas Act to create a presumption that licenses to export U.S. natural gas to NATO allies are in the U.S. public interest, “giving NATO allies the same preferential treatment enjoyed by our free trade partners,” he said.
Lugar alluded to a recently completed study, which was commissioned by DOE, that said exports of LNG would benefit the United States under virtually every scenario considered in the analysis (see Daily GPI, Dec. 6). However, large industrial end-users, particularly petrochemical companies, are opposed to exports as they fear they would raise the cost of natural gas feedstock in the United States (see Daily GPI, Dec. 7).
“U.S. shale gas reserves are already transforming European natural gas markets since LNG previously destined for the United States has now been made available for Europe,” Lugar said. “The United States can do much more to both use LNG exports to benefit NATO allies facing energy insecurity in Europe and to promote economic growth in the United States.”
The senator said Turkey relies on Iran for 20% of its natural gas imports, “which could come under increased pressure when the European Council’s decision of October 15, 2012 to prohibit the ‘purchase, import or transport of natural gas from Iran’ is implemented.
“Moreover, several allies and partners in central and southeastern Europe (Bulgaria, Croatia, Hungary, Greece, the Czech Republic and Moldova) will see their long-term contracts with [Russia’s] Gazprom expire in the coming years. For these countries, targeted U.S. LNG exports, along with infrastructure investment and other policy responses, could help alleviate energy insecurity.”
Currently, Europe imports LNG mainly from Algeria, Egypt, Oman and Qatar to meet about 26% of its gas needs, Lugar said.
“However, numerous European countries, some with financing from the European Bank for Reconstruction and Development, are considering construction of additional LNG import terminals, including Bulgaria, Croatia, Estonia, Lithuania, Latvia, Poland, Romania, Turkey and Ukraine,” he said. “In light of these dynamics, the United States is well positioned to become a strategic energy supplier of LNG to NATO allies in need of diversification.”
The DOE-commissioned study was a macroeconomic analysis of the potential effects of exporting LNG. It followed a DOE Energy Information Administration analysis of the potential impact of exports on domestic gas prices (see Daily GPI, Jan. 20).
Â©Copyright 2012Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.
© 2020 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |