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U.S. gas can’t foil Russian coercion

Europe to stay hostage until American LNG facilities expand


The United States, with its abundant supplies of natural gas, would seem to have an easy answer to Europe’s fears that a strong response to Russia’s rapid takeover of Ukraine’s Crimea region could prompt Russian President Vladimir Putin to shut down gas lines keeping European homes warm, factories humming and electricity flowing.

The trouble is, right now there is no way to get meaningful American supplies across the Atlantic Ocean.

Turning U.S. natural gas into liquefied natural gas (LNG), a process that makes the fuel transportable by ship, is very expensive. Beyond that the U.S. government has — until recently — been stingy with permits to build those facilities. And regulations make it difficult to sell U.S. gas to nations that aren’t in free trade compacts with Washington.

That is not good news for the EU, which is dependent on Russia for at least 30 percent of its natural gas. Consequently, Europe’s reaction to the Russian seizure of Crimea, while noisy, has little teeth.

Moscow already has a history of cutting some supplies to Europe. In 2009, Europeans shivered through part of the cold winter because Moscow turned the taps off in a dispute with Ukraine over the price of gas. Some of the pipelines carrying Russian gas pass through Ukraine. And Ukraine is once again in hock to Moscow for $1.89 billion in gas bills.

European dependence on Russian gas no doubt played into Putin’s calculus when his forces took control of the Crimean Peninsula, home to Moscow’s Black Sea fleet and 60 percent populated by ethnic Russians. Natural gas is Russia’s trump card.

And while U.S. gas supplies might have given Putin pause before he initiated the current crisis, he knew the United States could not quickly make up any shortages.

The crisis in Ukraine is expected to drag on even after Crimea’s status is resolved, and Europe could be waiting a while for new exports of LNG from the U.S. The first are not expected until late 2015 from a Louisiana facility. President Barack Obama’s Energy Department has approved only six LNG export applications in the past four years. All of those are unlikely to be in operation until 2017.

Twenty-two LNG export projects remain pending. Initial U.S. exports, even if they went to Europe rather than pricier markets in Asia, would not suffice to offset Russia’s market domination.

The Obama administration has been determined to use the American energy boom to move the U.S. away from dependence on imported energy, with many arguments for keeping U.S. natural gas at home. Exports, some argue, would raise the cost for Americans who heat their homes with the fuel and impose higher prices on manufacturers who use it to make other products like plastics and fertilizer. What is more, environmental activists contend a booming U.S. export sector would only cause even more fracking — shorthand for hydraulic fracturing — a process that many claim pollutes water supplies and increases greenhouse gas emissions.

Then there is the cost. Russia, using existing pipelines — some of which cross Ukraine — can deliver gas far less expensively than U.S. companies that would have to undertake the expense of turning the gas into a liquid and sending it by ship. And Asians are already paying far more for LNG deliveries than what Europeans spend for Russian gas.

Thus, writes Michael Levi of the Council on Foreign Relations, it is unlikely that a shift in U.S. policy would “deter Putin from using the gas weapon.”

“Moreover, unlike European gas companies, the big Russian players have much tighter ties with the state. If Moscow wants them to keep their share in the European market for strategic reasons, it may be able to make them do that. Russia would lose money — an important piece of geopolitical harm — but its leverage wouldn’t be slashed,” he said.

Vali Nasr, dean of the Johns Hopkins School of Advanced International Studies, says, however, that American supplies could have an effect.

“America’s gas would be more expensive than Russia’s, but the mere fact of an alternative would sap Russia’s leverage to blackmail Europe with threats of price rises or cutoff,” he writes in The New York Times.

Nevertheless, Michael McFaul, the just-departed U.S. ambassador to Moscow, says the availability of American gas to Europe “puts pressure on the government inside Russia if suddenly they’re losing those markets.”

But, he said, “I want to emphasize this is not going to happen overnight, over years, if not decades, not in days and weeks.”