Voice of Russia: Obama can't supply Europe with natural gas

March 31:

The American President promised his European allies that America will save Europe from its dependency on Russian natural gas imports. He promised to issue an order that will allow energy companies to export LNG from the US in unlimited quantities. But do those “unlimited quantities” really exist?

Rumors say that upon hearing the news about Obama's order to supply Europe with American natural gas, energy traders joked that the President will have more chances to succeed with an executive order canceling the law of gravity. The facts don't jive with the promises made by the US President.

The only existing project for LNG export is Freeport LNG that awaits the final approval by mid-2014 in order to start building the facilities required. The first operational unit of Freeport LNG will be on-line in 2020 and that is the best-case scenario. Moreover, most of the gas that is supposed to be liquefied and exported through this facility has already been bought by consumers in Asia where prices are 30-50 percent higher than in Europe. There four other projects in very early stages of development. According to a CNBC report, approximately 80 percent of the LNG exports coming on-line in the next few years are committed to Asia, currently the largest market for U.S. natural gas producers. Of course, the next US President can try to coerce the owners of Freeport into redirecting their flows to Europe but someone will have to compensate the resulting losses and it is a safe bet that America's budget is too stretched to handle such a massive blow.

Creation of new export facilities will not help because the US would have to sacrifice all the benefits of the “shale gas revolution” and give up all hope of wooing production back from China with lower energy costs in the US, because in order to put a dent in Gazprom revenue a huge amount of gas will have to be shipped to Europe. Moreover, the federal budget will have to subsidize natural gas trading with Europe in order not to allow the private companies that operate LNG terminals to ship the gas to customers in Asia. Such sacrifices, including the obvious risk of plunging the US into a deep recession, are a steep price to pay just to spite Russia and it is quite unlikely that an American president trying to implement such a plan would remain in office for long. In the improbable scenario that the US agrees to sacrifice its economy in order to supply the EU with natural gas, the refurbishment of the European natural gas transportation system to allow massive LNG imports will require 5 to 7 years of cooperative work with the involvement of all European countries, with the costs ranging from 85 to 185 billion dollars, depending on the source of estimation.

The facts show that the US will not be able to replace Russia or even dent Russia's influence on the European energy market, regardless of the promises made by Barack Obama.
Read more: http://voiceofrussia.com/2014_03_31/Obama-cant-supply-Europe-with-natural-gas-8249/

Source: http://voiceofrussia.com/2014_03_31/Obama-cant-supply-Europe-with-natural-gas-8249/