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U.S. Lawmakers see exports of natural gas as a way to help Ukraine

- The Washington Times - Tuesday, March 4, 2014

A growing chorus of lawmakers Tuesday urged President Obama to fully tap America's vast supply of natural gas and use it as powerful leverage against Russian President Vladimir Putin.

The calls came on the same day that Russian state-run energy giant Gazprom threatened to raise natural-gas prices for Ukraine, adding more tension to the already volatile situation on the Crimean Peninsula, in Kiev and across the troubled Russian neighbor.

Ukraine gets about 60 percent of its gas from Russia, potentially giving Moscow even greater power and influence in the region. A report released Tuesday by the U.S. Chamber of Commerce ranked Ukraine last among 25 countries in energy security, meaning the nation is more vulnerable than any other to disruptions in flow or the whims of its suppliers.

European nations such as Germany, which the U.S. must have on board to enact effective economic sanctions and other retaliatory measures against Mr. Putin, also get much of their gas from Russia.

As a whole, Russia provides about 30 percent of Europe's gas. For Germany, the figure is closer to 40 percent.

That dependence allows Moscow to threaten gas shutoffs or sudden price hikes — moves that could put Ukraine in an even weaker position while also dissuading Europe from backing a freeze of Russian assets, suspensions of trade relationships with Moscow, economic sanctions or other punishments.

To counter that, lawmakers say the U.S. should expedite the two dozen natural-gas export projects that remain bogged down in lengthy bureaucratic reviews inside the Obama administration's Energy Department.

"While the White House is considering how to support Ukraine, one of the best steps it can take is to help end their dependence on Russian energy," said Sen. John Barrasso, Wyoming Republican, who has introduced legislation to force the Energy Department to more quickly decide on liquefied natural-gas export proposals.

"The United States has abundant supplies of natural gas just waiting to be exported to our allies," he continued. "If President Obama is serious about helping the people of Ukraine, he will immediately expedite the approval process for liquefied natural-gas exports. American natural-gas exports would help Ukraine free itself from Russian energy and Putin's political manipulation."

Similar calls came Tuesday from Sen. James M. Inhofe, Oklahoma Republican, the ranking member of the Senate Armed Services Committee, and House Speaker John A. Boehner, among others.

But some energy analysts say it's not quite that simple. The Energy Department's approval process is complex and requires detailed study of whether the gas-export projects are in the nation's interest. The chief question the department examines is whether gas exports could lower supply at home and, in turn, raise domestic prices.

Thus far, the Energy Department has approved six such export projects. Twenty-four others remain under review.

Aside from the complex approval process, specialists say it's impossible to dramatically change the global energy market in a matter of days or weeks. With Russian troops in Ukraine and fears mounting they'll move beyond Crimea, quick action is crucial, and altering the worldwide flow of natural gas simply may not happen fast enough to have a real impact on the current crisis.

Furthermore, analysts think Russia won't cut off the flow of natural gas, as it did in 2006 and 2009 amid price disputes with Ukraine. Using the fuel as a weapon so could damage Moscow as much as anyone else, said Edward Chow, a senior fellow in the Energy and National Security Program at the Center for Strategic and International Studies.

"My sense is that unless things get even worse than they already have, Russian gas flows through Ukraine won't be affected because it doesn't serve either side. Ukraine still does need Russian gas, but it also has leverage over Russia because more than 50 percent of the gas that Gazprom sells to Europe still goes through Ukraine" via pipeline, said Mr. Chow, who specializes in energy and national security. "So if the Russians were to cut off Ukraine, it would cut off their downstream customers in Europe. Neither side would really want to trigger that, unless things go really badly."

Long term, however, Mr. Chow said, the current hostility in Ukraine does underscore how Germany and other European nations could benefit from American gas rather than fuel from a hostile, unpredictable Russia.

Germany, for example, is slipping in terms of its energy security. A report from the U.S. Chamber of Commerce's Institute for 21st-Century Energy shows that Germany ranks ninth in terms of energy security across the globe — a calculation that factors in where nations get their fuel, how much of it is produced domestically, the energy efficiency of a country's infrastructure and other considerations.

Less than a decade ago, Germany ranked seventh.

Western European nations "have tremendously high risks when it comes to oil and gas imports, particularly natural-gas import risks. That has a lot to do with what we're seeing now in Europe and their dependence on Russian gas," said Steve Eule, the Institute's vice president, in a conference call with reporters Tuesday. "This argues, from our point of view, for greater exports of U.S. oil and gas to Europe. We think that would have tremendous impact in lowering risks, especially when it comes to natural-gas import risks in Europe."

The U.S. ranked sixth in the study, while Norway came in first, a position it has held for the past decade.

Ukraine consistently has been the least-secure nation in terms of energy since the Chamber began its study in 1980.

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