The Russia-Ukraine Crisis: A Case for Expediting Liquified Natural Gas Export

Russian President Vladimir Putin said in a news conference yesterday that Russia, the world’s second largest supplier of natural gas behind the U.S.,  is canceling the price discount on natural gas for Ukraine because the country owes money to Russian gas giant OAO Gazprom.  Because of pricing and debt disputes, Russian gas supplies to Ukraine have been disrupted twice since 2005 and reduced in 2008, cutting off deliveries to southeastern Europe.  The unrest in Ukraine could also pose financial complications for the gas trade in Europe if the U.S. and its allies impose economic sanctions on Russia.

The U.S. House Energy and Commerce Committee Chairman Fred Upton (R-MI) released a statement on Monday urging the U.S. to act expeditiously in combatting Russian influence over Ukraine’s energy market.  Upton said,

“Expanding U.S. Liquified Natural Gas (LNG) exports is an opportunity to combat Russian influence and power, and we have an energy diplomacy responsibility to act quickly.  The Department of Energy’s (DOE) approval process for LNG exports is unnecessarily putting our allies at the mercy of Vladimir Putin.  Now is the time to send the signal to our global allies that U.S. natural gas will be an available and viable alternative to meet their energy needs.  Based on the committee’s work and input from multiple stakeholders, we will continue to advance legislation and develop new proposals that allow market forces and technology to help expand Eastern Europe’s access to affordable energy beyond Russia.”[1]

House Speaker John Boehner (R-OH) echoed Upton’s sentiment, urging President Obama to take immediate action on an approval process that Boehner described as “excruciatingly slow.”[2]

American companies currently need the DOE approval to export LNG to countries that lack a free-trade agreement (FTA) with the U.S.[3]  Non-FTA applications require DOE to post a notice of application in the Federal Register for comments, protests and motions to intervene, and evaluation of the application to make a public interest consistency determination.  Under the Natural Gas Act, FTA exports are considered in the public interest and applications shall be authorized without modification or delay.  All LNG export projects also need to pass a Federal Energy Regulatory Commission environmental and safety review.  Last month, the DOE approved the sixth Non-FTA Application since 2011, while more than twenty applications remain pending.  As of February 11, 2014, thirty-two FTA applications have been approved.[4]

 



[1] http://energycommerce.house.gov/press-release/upton-us-lng-exports-can-weaken-russian-influence.

[2] http://washingtonexaminer.com/john-boehner-calls-on-obama-to-export-fuel-to-ukraine/article/2545040.

[3] For a list of U.S. FTA Partner Countries, see http://trade.gov/fta/.

[4] http://energy.gov/sites/prod/files/2014/02/f8/Summary%20of%20LNG%20Export%20Applications.pdf.

 

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