Russia is a major player in the global energy market, and it has offered to pump more gas into Europe. It’s been reported that Russian President Vladimir Putin said he would consider supplying gas from Russia to the European Union if the United States pulled out of its nuclear deal with Iran. But analysts doubt that will ever happen because other countries are not likely to give up their own gas deals with Russia.
Russia has been an important part of Europe’s gas market for decades. But experts say there are too many barriers, including distance and cost.
It is extremely difficult to see how Russia would go about selling US LNG in Asia, said Matt Reed, vice president of Foreign Reports, a company that analyzes international affairs. As for the EU, it’s hard to believe Poland or Lithuania would agree to re-export Russian gas.
At the moment, Russia is working with European partners to build new pipelines. One example is the Nord Stream 2 Project. This would allow Russian gas to go under the Baltic Sea directly to Germany. It would mean that there could be no supplies from other countries. The pipeline has received criticism because it would limit supply diversity in Europe.
But many experts say the project is actually in the interest of the European Union.
Nord Stream 2 would not harm diversity. It’s simply business, said Konstantin Simonov, general director of Russia’s National Energy Security Fund. When you diversify when you use more than one supplier this means that you are creating competition.
Simonov said Nord Stream 2 would actually increase competition by providing another big supplier, someone to compete with Gazprom.
Gazprom is the Russian gas company that sells more than 150 billion cubic meters 5 trillion cubic feet of gas in Europe every year. The United States is not even close to that number. According to the US Energy Information Administration, the United States exported about 8.9 billion cubic meters bcm of natural gas in 2017 less than half a percent of the global market.
That’s why Reed said there was no competitor while Simonov suggested the company could eventually become one.
US energy companies can also help increase competition, according to Simonov. This is because American companies have a record of success in developing shale gas, according to the analyst.
Shale fracking is the process of extracting natural gas from shale rock by shattering it. But this could change after US LNG exports are approved and eases regulations on exporting, said Rob DiPietro, an energy professor at the S.C. Johnson Graduate School of Business at Cornell University in New York.
Right now, only a few US LNG export terminals are approved by the Energy Department’s Office of Fossil Energy, which regulates LNG exports and authorizes an export application if it is determined that the proposed exportation of natural gas will not harm the US economy or consumers. However, many more have applied for approval.
It’s not yet clear which companies are planning to export LNG from these terminals, but it is likely they will look for international buyers in the near future, according to DiPietro.