Crisis Pressures U.S. on Gas Exports
Lawmakers Urge Administration to Ease Barriers to Sales That Could Weaken Russia’s Grip on Ukraine
Urgono leggi per togliere ostacoli alla vendita di gas che potrebbero indebolire Grip della Russia sull’Ucraina
Sia Repubblicani che Democratici fanno pressione sul presidente Barack Obama a prendere misure che aprano il rubinetto della nazione alle esportazioni di gas naturale per indebolire la pressione della Russia sull’Ucraina .
John Kerry, second right, and Russia’s Sergei Lavrov, behind him, amid officials in Paris Wednesday. Alain Jocard/Press Pool
Congressional Republicans and energy-state Democrats are ramping up pressure on President Barack Obama to take steps to open the nation’s spigot of natural-gas exports as a way to weaken Russia’s hand over Ukraine.
The Obama administration is restricted by a law that creates regulatory hurdles for the U.S. to export natural gas to countries that aren’t free-trade partners. But officials say the current situation in Europe might change the equation.
Vladimir Putin’s trump card against the West is its oil business, which supplies fully 30% of Europe’s energy needs. But the oil boom in the U.S. could pose a real threat to Russia’s oil monopoly, columnist John Bussey says on MoneyBeat. Photo: Getty Images.
“I would certainly welcome consultation in terms of how to go forward,” Energy Secretary Ernest Moniz said Wednesday at an energy conference in Houston. “This is obviously a very, very serious and important situation.”
Protesters storm a building in Donetsk, Ukraine. Associated Press
To comply with the export law, the Energy Department must determine that a recipient of the gas is in the U.S. national interest. Over the past few years, as domestic supplies have ballooned, the Energy Department has approved six such applications—out of more than 20 pending—to export natural gas to countries that aren’t U.S. free-trade partners. Most if not all of that gas is going to Asia, where companies can fetch higher prices. Ukraine relies on Russia for about 70% of its natural-gas supplies, and is also a key transit country for sending Russian gas to more than a dozen other European nations.
Advocates for greater U.S. natural-gas exports urge a loosening of the rules so Ukraine isn’t so dependent on Russia, which over the weekend sparked Western ire by occupying the Crimea region of Ukraine.
Thanks to horizontal drilling and hydraulic fracturing, the U.S. is producing more natural gas than it ever has and the most oil since the mid-1990s. This has turned on its head the conventional wisdom, widely held until the past six years, that the U.S. was running out of these resources. The U.S. is on track this year to surpass Russia as the biggest natural-gas producer in the world, and to take over the top oil-producing spot from Saudi Arabia by 2015.
While it would take years to build the infrastructure and sign contracts to send natural gas to Europe, a mere promise from the White House could itself change the dynamic and weaken Russia’s hand, advocates of such a move argue.
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“It’s all about timing and it’s all about volume,” said a foreign diplomatic official following the crisis closely. “If it will be a decision made in several weeks, it’s nothing. Because right now we are counting hours and days, but if there is a decision, for example an official statement of the president or the White House that they are ready to provide dozens of licenses for American companies to export huge amounts of natural gas, it would not just influence European markets, it will have a major impact on [Russian] gas prices and on international markets.”
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Russia supplies about 30% of the European Union’s gas by volume, according to Gazprom, the state-controlled gas company. About half of Russia’s gas bound for Europe flows through Ukraine. Those flows halted in 2006 and 2009 amid financial disputes between Moscow and Kiev. During the latest spat, gas prices soared across Europe and many countries faced shortages.
A Gazprom spokeswoman didn’t return a request to comment on Wednesday.
Despite the outcry, some Democrats, including Sens. Edward Markey of Massachusetts and Debbie Stabenow of Michigan, have expressed concern about exporting too much too quickly. They, along with manufacturers that use natural gas as a feedstock like Dow Chemical Co. DOW +0.91% , worry that the competitive advantage the U.S. has right now with cheap natural gas could be squandered if the government approves too many applications.
But pressure from lawmakers is growing. House Speaker John Boehner (R., Ohio), has been publicly calling for the administration to use its energy resources as a diplomatic tool.
“If the president wanted to strengthen his hand, and help protect our allies in the region, he’d pick up his phone and use his pen and have the Energy Department approve the applications for these [liquefied natural gas] exports,” Mr. Boehner said in a news conference Wednesday.
The strongest words came from Mr. Obama’s GOP critics, but members of his own party aren’t happy either.
“I will be bringing this up. It is clear that a lot of the conflict and economic stress in Europe and the surrounding region is energy related,” said Sen. Mary Landrieu (D., La.), who chairs the Senate Energy and Natural Resources Committee.
—Alison Sider, Russell Gold, Leslie Eaton, Lynn Cook and Jan Hromadko contributed to this article.