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LUGAR: U.S. natural gas exports could break Russian dominance

Sell to NATO and support new pipeline

- - Wednesday, December 12, 2012

Deep winter is approaching in Eastern and Central Europe and the Caucasus, bringing with it the prospect of icy days and frigid nights. For our friends and allies in the region, it also brings a chilly reminder of their chronic over-dependence for heat and power on natural gas from Russia, which has demonstrated a penchant for using energy as a weapon against its neighbors.

The good news is, recent trends have turned in favor of our NATO allies and other friends to break Russia's energy dominance. The United States can capitalize on these trends by utilizing our own new-found abundance of natural gas and pursuing smart, committed diplomacy in the region, to help many nations diversify their energy imports.

Most countries in the eastern European Union, nearly all of them NATO members, as well as E.U. aspirants Ukraine and Moldova, are heavily dependent on Russian gas. In the past, Moscow showed itself quick to use energy as a club to punish and coerce its neighbors -- but the Russians overplayed their hand.

After too many threats and actual cutoffs by the Kremlin, the European Commission is now going after the giant Russian state gas monopoly, Gazprom, for anti-competitive behavior and price gouging. At the same time, European countries are turning to the Middle East for new, cheaper, supplies of liquefied natural gas (LNG), which had been intended for the United States before our own shale gas revolution turned us from a nascent importer to a potential exporter. This has helped strengthen the Europeans' bargaining position with Russia.

These trends may not last, but they have opened a window for the United States, with our European allies, to advance broad natural gas diversification. The U.S. should move quickly to seize this opportunity.

As a first step, we should allow exports of U.S. natural gas, now abundant thanks to shale gas, to all our NATO allies. America has surpassed Russia as the world's largest natural gas producer. At current consumption rates, we have an estimated 100-year supply, and prices have fallen so low that new drilling activity is drying up. We could easily export some of this surplus as LNG without causing consumer gas prices to spike here at home. I have drafted the LNG for NATO Act, which would let America sell gas to our friends in NATO without going through the cumbersome export licensing requirements under current law.

Even more importantly, we need to use all our diplomatic tools to bring to fruition a long-sought "southern corridor" gas pipeline that would bypass Russia to bring the huge supplies of natural gas near the Caspian Sea directly to Europe. A pipeline through Turkey directly into southeastern Europe could transport gas from Azerbaijan, Turkmenistan and even Iraq directly to those parts of Europe most reliant on Russian supplies.

These moves would have the additional strategic virtue of further isolating Iran by crimping its gas exports.

Previous southern pipeline proposals have foundered due to political and commercial wrangling, as well as meddling by Russia, which has its own, economically dubious, "South Stream" pipeline plan to keep Europe hooked on Russian gas. According to a Senate Foreign Relations Committee study I commissioned, however, Turkey and Azerbaijan have now come together on the Trans-Anatolian Pipeline (TANAP), the centerpiece of a potential solution. Connected with an existing gas pipeline to the Caspian and to a proposed extension through southeastern Europe to Austria, it would meet our strategic energy goals in the region.

Much remains to be done to bring this ambitious international project to a conclusion in a way that truly enhances our allies' security, including intense shuttle diplomacy among regional capitals by the U.S. and the E.U. That's why I have urged the administration to retain the position of Special Envoy for Eurasian Energy Affairs, which has proved highly effective. Keeping the post separate, instead of transferring its duties to the leader of the State Department's world-wide Energy Resources bureau as is planned, would be a low-cost, high-payoff demonstration of U.S. leadership in this critical area.

The United States has strong national security interests in achieving energy supply diversity for our allies and partners in the Eurasia region and guaranteeing their sovereignty in policymaking, economic development and security. With continuous attention from the highest levels of our government to the southern corridor project, we can help make it happen.

Sen. Richard G. Lugar, Indiana Republican, is ranking member of the Senate Foreign Relations Committee.