US energy secretary Rick Perry will sign two export orders for liquefied natural gas (LNG) in Brussels today (2 May), in a move officials said will double America’s export capacity to Europe to 112 billion cubic meters per year as of 2020.
Seventy-five years after liberating Europe from Nazi Germany occupation, “the United States is again delivering a form of freedom to the European continent,” said Rick Perry, the US energy secretary.
“And rather than in the form of young American soldiers, it’s in the form of liquefied natural gas,” he told reporters in Brussels on Wednesday (1 May).
“So yes, I think you may be correct in your observation,” he said in reply to EURACTIV, who asked whether “freedom gas” would be a fair way of describing US LNG exports to Europe.
Perry is in Brussels to sign an LNG export order “with a couple of companies” on the sidelines of the first EU-US high-level business forum on energy, hosted by the European Commission on Thursday (2 May).
“So that’s a big deal,” Perry told a small group of journalists invited to a briefing. “The opportunity for Europe to have a very substantial supportive alternative to Russian gas is on display here,” he said.
The LNG export orders come as a follow-up to a July 2018 joint statement by European Commission President Jean-Claude Juncker and US President Donald Trump, in which both sides agreed to strengthen strategic energy cooperation.
“The European Union wants to import more liquefied natural gas (LNG) from the United States to diversify its energy supply,” the statement said.
It’s only been a couple of years since the US started exporting LNG, and Japan is currently the biggest destination country. But the new export orders will allow doubling capacity to Europe, said Steven Winberg, assistant US secretary for fossil energy, who was sitting alongside Secretary Perry as part of an impressive US delegation.
“We’re expecting about 8 billion cubic meters per annum of [additional] US LNG into Europe over a 12 month period. We have about 10bcm per annum of capacity right now, so we could in effect double exports to Europe,” Winberg said.
“Perhaps even more relevant is that by 2020, we will go from 50bcm of export capacity to 112bcm per annum – more than doubling capacity in the next 18 months,” Winberg added.
LNG is significantly more expensive than pipeline gas from Russia and Norway, which are currently the two main exporters of gas to Europe. But some EU countries – chiefly Poland and the Baltic states – are ready to pay a premium in order to diversify their supplies.
Bulgaria, which is currently 100% reliant on Russian gas, said it was ready to import LNG from the US if the price was competitive, suggesting a $1 billion US fund could be used to bring the price down.
But Perry dismissed any suggestion that the US government would interfere on pricing, saying it was up to the companies involved to sign export and import deals.
“We are competing against a state actor which is heavily subsidised,” said, Gordon Sondland, US ambassador to the EU, in reference to Russia’s Gazprom. “And the more volume we do, I think the price will come down naturally,” he added.
Nord Stream 2 in the firing line
According to Perry, the US move on LNG exports will undermine the economic authority of Nord Stream 2, a controversial pipeline project designed to bring Russian gas directly to Germany via the Baltic Sea.
“It makes it more and more economically unfeasible,” said the US energy secretary. “When you get a 20 year contract signed for LNG and you know that the product is going to be delivered in a timely fashion over the next 20 years, why would you want to go to another source of energy?,” he asked.
“Russia will cut off your gas in a moment’s notice if you’re not following their political direction,” Perry warned, referring to a high-profile dispute between Ukraine and Russia over transit fees, which left Europe in the cold during the winter of 2006-07.
“We are not for Nord Stream 2,” Perry said, adding it was “a bad idea to have a single source of supply” for gas in Europe. “Every day that Nord Stream 2 is not completed is another day that the EU has more options for their future natural gas supplies,” he added.
Not only is the US opposed to Nord Stream 2, it has actually threatened to impose sanctions on European firms that participate in the Russian-sponsored gas pipeline project. And those sanctions remain on the table, Perry warned.
“The idea that sanctions are available is still very much a reality,” Perry said, adding it will be up to the US President to decide” whether to apply them or not.
[Edited by Samuel Stolton]