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US senator introduces bill to facilitate LNG exports to Europe

December 20, 2012
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LNG tankerThe United States is looking into ways to play a more important role in the European natural gas market by lifting the limitations on liquefied natural gas (LNG) deliveries to its transatlantic allies and helping them become less dependent on Russian natural gas, U.S. Senator Richard G. Lugar has announced.

According to Reuters, Lugar has introduced a new draft bill to the U.S. Senate that calls for facilitated access for European NATO member-states to natural gas shipped from the United States. He stated that Moscow has used its dominance of the gas market to exert control over its neighbors but Russia had “overplayed its hand.”

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Lugar proposed that the draft bill, the LNG for NATO Act, should allow the United States to sell natural gas to its NATO allies under more lenient regulations regarding export licensing. He said that the boom in U.S. shale gas production, which is predicted to continue over the long term, means that the country has now overtaken Russia as the world’s largest producer of natural gas.

Bearing in mind the present domestic consumption rate, the existing resources can provide enough supply for 100 years and prices have dropped to a point that drilling activities have come to a halt, Lugar said. These factors suggest that the United States could easily export LNG without risking a rise in gas prices on the domestic market.

As part of the project to draw European countries away from Russia, Lugar also supported the construction of a new gas pipeline, known as the “Southern Corridor.” It would transport gas from the Caspian Sea region through Turkey to South-Eastern Europe, bypassing Russia on its way. Export of shale gas could augment the effect of the pipeline and further weaken Russia’s position on the market, he noted.

If the pipeline project goes ahead, it could also help Turkey reduce its dependence on Iranian supplies. Lugar concluded that in order to make this happen a combination of diplomacy and political will is required, as currently plans for the Southern Corridor pipeline are stuck due to a number of national and business interests.

Meanwhile, Russia is making moves to tap its unused resources and explore its own shale potential. Last month, Russia’s Ministry of Energy announced that giants Rosneft and Gazprom are launching test shale gas projects. However, Gazprom has already stated that it was more interested in shale oil than gas. Overall, industry experts see no reason to believe that Russia’s energy sector might be threatened in the near future, the RT website reported.

At present, Russian natural gas accounts for more than 60 percent of gas imports in countries including Austria, Bulgaria, the Czech Republic, Finland, Poland, the Baltic states, Slovakia, Turkey and Ukraine. Moscow is also working on a competing pipeline project called South Stream, and Lugar warned that the project might allow Russia to “tighten its grip” on European countries.

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