US Senate bill to make Europe less energy dependent on Russia

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Published time: December 13, 2012 11:32
Edited time: December 13, 2012 15:37

The US seeks to lift limitations on its LNG deliveries to Europe and strengthen competition in European energy markets. It’s to break the EU’s dependence on Russian gas, as “the Russians overplayed their hand”, says US Senator Richard G. Lugar.

“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,” The Washington Times quotes Indiana Republican Richard Lugar.

Lugar introduced a corresponding draft bill in the US Senate, urging the country to join its NATO allies in an effort to break Russia’s energy dominance.

The LNG for NATO Act drafted by Lugar is aimed at allowing America sell gas to its friends in the North Atlantic bloc without going through the existing messy export licensing requirements.

With all the recent discoveries of domestic shale gas deposits in the US the country has already left Russia behind as the world’s biggest natural gas producer, Lugar said.

“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.”

Another but not less important initiative was the Senator’s idea of a so- called “southern corridor” gas pipeline, bypassing Russia to bring the huge supplies of natural gas near the Caspian Sea directly to Europe. The plan says a pipeline would run through Turkey directly into south eastern Europe, transporting gas from Azerbaijan, Turkmenistan and even Iraq directly to those parts of Europe that heavily rely on Russian supplies.

At the moment a combination of political will and diplomacy would be necessary to make it happen, Lugar concluded.

Russia’s gas major Gazprom is now being chased by the European Commission that accuses it of anti-competitive behavior and price gouging. The price tag for Gazprom for such uncompetitive behavior could be over €10bn.

The Russian Ministry of Energy was reported in late November to be starting exploration of its own shale potential, with Rosneft and Gazprom starting shale gas production at test sites after a survey of the country’s resources. Gazprom said it was more interested in developing shale oil rather than shale gas in Russia.But market analysts largely agree that there’s no a real threat to Russia’s energy sector in the near future.

In November 2012, Gazprom and its partners in the South Stream gas pipeline that runs under the Black Sea to Europe signed off on the final investment to launch the €16bn project. Beginning in December Gazprom and its partners started construction of the pipeline that will rival the Nabucco project. This “economically dubious” South Stream pipeline project is the one that “keeps Europe hooked on Russian gas,” the US Senator stressed.

Another of Russia’s great energy projects is Nord Stream that delivers Russian gas to Europe. It has seen its second stretch launched in October, with the first pipeline having started to deliver gas to an estimated 26 million homes in the EU in November 2011.