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In geopolitics, Texas shale gas could play a role

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WASHINGTON – Interest in importing U.S. natural gas remains strong across the Atlantic Ocean, providing opportunities for the American industry as European nations try to reduce their dependence on Russian supplies, European diplomatic officials said Thursday.

Shale gas produced by Houston and Texas companies, and exported by companies such as Cheniere Energy, could play an increasing role in global geopolitics. Following Russian President Vladimir Putin’s threat to shut off a pipeline running through Ukraine last year, officials from Poland, the Czech Republic, Hungary and Slovakia said their nations are working to get terminals and other infrastructure built to import more liquefied natural gas from abroad.

“We are small. We are very much industrialized, with not a lot of energy resources,” Jan Kuderjavy, director of economic diplomacy in the Slovak Republic, said Thursday during a forum at the Atlantic Council, an international affairs think tank. “Energy diversity is very dear to us, and we’re trying to find a solution.”

With a glut of natural gas in the United States, producers in shale fields across Texas and Pennsylvania are eager to ship LNG to Europe where Russia, the world’s largest gas exporter, has long reigned supreme. A series of terminals designed to liquefy natural gas for shipment abroad are in various stages of development along the Gulf and East Coasts. The first, Cheniere Energy’s Sabine Pass terminal, began operation earlier this year and has made at least seven shipments abroad, although only one was bound for Europe.

Robin Dunnigan, U.S. deputy assistant secretary of state for energy diplomacy, said much work remains in Europe to build the terminals, pipelines, and port facilities necessary to import LNG from across the Atlantic Ocean, but progress is being made. She cited an import terminal that opened in Poland last year and pointed to projects under discussion in Greece and Croatia.

“The U.S. will be a reliable supplier to global markets. That’s not only good for us but for our allies around the world,” she said. “But it doesn’t matter how many molecules of gas we put on the market if once it gets to Europe it can’t move freely around” through pipelines.

Right now the United States exports 1.8 trillion cubic feet of gas a year, almost entirely to Mexico and Canada through pipelines. But there is a push in Washington to expand LNG exports to Europe and Asia, using American energy supplies to counter those of its rivals.

“Countries like Russia are major suppliers to NATO countries,” Sen.John Cornyn, R-Texas, said in February. “They can easily use their control of energy resources to hold our partners over a barrel.”

But it’s still unclear how much natural gas U.S. suppliers will be able to sell overseas.

Leslie Palti-Guzman, director of global gas at the consulting firm The Rapidan Group, testified before the Senate this week that she didn’t expect to see much demand for American LNG abroad until after 2017, at least in part due to the current stability of supplies from Russia and the Middle East.

“Building U.S. LNG facilities was in retrospect the easy part,” Palti-Guzman said. “Now the U.S. LNG needs to sell.”

Russia is sending signals it will not cede the European gas market easily. Gazprom, the state-controlled gas giant, has lowered rates on its existing pipelines, said Bud Coote, a resident senior fellow at the Atlantic Council.

So far, Russia has not made good on its threat to shut down one of its European pipelines. But Putin’s decision to send troops into Ukraine in 2014 raised the specter of a return to Soviet-style imperialism in Eastern Europe – and Putin’s willingness to use its control of energy resources as a weapon.

Dependence on Russian gas remains most acute in Central and Eastern Europe, particularly among smaller countries without sea access, officials said. But even for larger countries not as reliant on Russia, there is an incentive to bring U.S. gas to Europe, said Vaclav Bartuska, ambassador-at-large for energy security for the Czech Republic.

“The issue now is the price of gas,” he said. “We welcome another boring exporter of natural gas, one that plays by the rules and doesn’t use energy as a weapon.”


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