A Closer Look at the Trump and Juncker Agreement

Array
(
    [field_blog_author] => Array
        (
            [#theme] => field
            [#weight] => 0
            [#title] => Blog Author
            [#access] => 1
            [#label_display] => hidden
            [#view_mode] => full
            [#language] => und
            [#field_name] => field_blog_author
            [#field_type] => text
            [#field_translatable] => 0
            [#entity_type] => node
            [#bundle] => wp_blog
            [#object] => stdClass Object
                (
                    [vid] => 8775
                    [uid] => 118
                    [title] => A Closer Look at the Trump and Juncker Agreement
                    [log] => 
                    [status] => 1
                    [comment] => 1
                    [promote] => 0
                    [sticky] => 0
                    [nid] => 6636
                    [type] => wp_blog
                    [language] => und
                    [created] => 1533067977
                    [changed] => 1533127312
                    [tnid] => 0
                    [translate] => 0
                    [revision_timestamp] => 1533127312
                    [revision_uid] => 90
                    [body] => Array
                        (
                            [und] => Array
                                (
                                    [0] => Array
                                        (
                                            [value] => 

Last week, in an effort to prevent a possible trade war over U.S. steel and aluminum tariffs, the President of the European Commission (EC) Jean-Claude Juncker met in Washington with U.S. President Donald Trump. They struck an agreement about Europe buying more U.S. LNG. But as noted by many analysts, neither side can really make this happen.

The agreement includes very few details: Juncker committed Europe to significantly increase their volume of U.S. LNG imports, while Trump agreed to send more. Yet neither person making the promises has much influence on fulfilling them. The LNG that originates from U.S. coasts does not belong to the U.S. government but to profit-seeking private companies. The U.S. government can encourage LNG production—by providing a hospitable regulatory and legal environment—but it cannot force companies to send products to a specific region or country.

On his part, Juncker represents the EU but is ultimately dependent on individual EU member decisions. The EU cannot force its members to import U.S. LNG, but it can motivate or make it possible through investment in and financing of LNG infrastructure.

Going further, analysts are not sure whether additional LNG importing capacity would ultimately attract U.S. LNG. Some point to the existing capacity that is currently underused, a result of inadequate LNG demand and LNG prices that are high in comparison to the piped Russian gas. In addition, there is the question of LNG competition from cheaper and/or more proximate producers such as Norway, Qatar or, most recently, Russia.

Today’s U.S. producers are lured to Asia, where higher prices provide higher profit margins. Thus, even if more terminals are built, it is not a given that these terminals will maximize capacity or draw LNG from the U.S.

In the meantime, Russia has noted record-level highs in natural gas delivery to Europe in 2016 and 2017. And new, more secure transport routes are being built (Nord Stream 2, Turkish Stream) to deliver the abundant and low-cost Russian gas to Europe.

But while Juncker’s promise of large U.S. LNG imports may never materialize, his commitment to building new LNG terminals may actually be an important part of the U.S.-EU natural gas and energy security strategy.

Strategically placed (see Figure 1), new terminals could impact Russian pipeline gas deliveries—if not in volume, then at least in price—while dulling the geopolitical benefits Russia is deriving from its dominant supplier position. My recent research with Gabriel Collins identifies in detail the elements needed to achieve this goal. In a nutshell, the EU must:

  1. Build terminals in areas that are currently highly dependent on Russian gas;
  2. Ramp up underutilized LNG import capacity—with pipelines and interconnectors that take gas into areas that lack gas diversity;
  3. Push harder for market-based rules to govern the natural gas market within EU member states, to encourage competition and spawn interest from U.S. LNG producers.

Figure 1. Priority Zones for Geoeconomic Gas Investments 

Source: Collins & Mikulska, 2018.

Would all this bring a rush of U.S. LNG onto the European shores?

Unlikely. U.S. LNG is expected to continue to flow to Asia, where prices and demand are advantageous for U.S. producers.

But as much or as little of the U.S. LNG that would actually reach Europe would not be inconsequential.

LNG infrastructure in Europe would provide ability for the U.S. LNG to feed into the market whenever price disruptions emerge. As such it would provide a price floor and protection from extraction of economic rents by a dominant supplier.

In addition, the deliveries would neutralize geopolitical influence Russia as such supplier has yielded (also a major win for the U.S.).  In economic terms, activating more LNG capacity and more potential demand, would be beneficial for U.S. LNG producers. Even if their products never reach European shores, European LNG demand it will impact the industry via displacement: non-U.S. LNG delivered to Europe makes space for U.S deliveries elsewhere, including China or India, for example.

[summary] => [format] => full_html [safe_value] =>

Last week, in an effort to prevent a possible trade war over U.S. steel and aluminum tariffs, the President of the European Commission (EC) Jean-Claude Juncker met in Washington with U.S. President Donald Trump. They struck an agreement about Europe buying more U.S. LNG. But as noted by many analysts, neither side can really make this happen.

The agreement includes very few details: Juncker committed Europe to significantly increase their volume of U.S. LNG imports, while Trump agreed to send more. Yet neither person making the promises has much influence on fulfilling them. The LNG that originates from U.S. coasts does not belong to the U.S. government but to profit-seeking private companies. The U.S. government can encourage LNG production—by providing a hospitable regulatory and legal environment—but it cannot force companies to send products to a specific region or country.

On his part, Juncker represents the EU but is ultimately dependent on individual EU member decisions. The EU cannot force its members to import U.S. LNG, but it can motivate or make it possible through investment in and financing of LNG infrastructure.

Going further, analysts are not sure whether additional LNG importing capacity would ultimately attract U.S. LNG. Some point to the existing capacity that is currently underused, a result of inadequate LNG demand and LNG prices that are high in comparison to the piped Russian gas. In addition, there is the question of LNG competition from cheaper and/or more proximate producers such as Norway, Qatar or, most recently, Russia.

Today’s U.S. producers are lured to Asia, where higher prices provide higher profit margins. Thus, even if more terminals are built, it is not a given that these terminals will maximize capacity or draw LNG from the U.S.

In the meantime, Russia has noted record-level highs in natural gas delivery to Europe in 2016 and 2017. And new, more secure transport routes are being built (Nord Stream 2, Turkish Stream) to deliver the abundant and low-cost Russian gas to Europe.

But while Juncker’s promise of large U.S. LNG imports may never materialize, his commitment to building new LNG terminals may actually be an important part of the U.S.-EU natural gas and energy security strategy.

Strategically placed (see Figure 1), new terminals could impact Russian pipeline gas deliveries—if not in volume, then at least in price—while dulling the geopolitical benefits Russia is deriving from its dominant supplier position. My recent research with Gabriel Collins identifies in detail the elements needed to achieve this goal. In a nutshell, the EU must:

  1. Build terminals in areas that are currently highly dependent on Russian gas;
  2. Ramp up underutilized LNG import capacity—with pipelines and interconnectors that take gas into areas that lack gas diversity;
  3. Push harder for market-based rules to govern the natural gas market within EU member states, to encourage competition and spawn interest from U.S. LNG producers.

Figure 1. Priority Zones for Geoeconomic Gas Investments 

Source: Collins & Mikulska, 2018.

Would all this bring a rush of U.S. LNG onto the European shores?

Unlikely. U.S. LNG is expected to continue to flow to Asia, where prices and demand are advantageous for U.S. producers.

But as much or as little of the U.S. LNG that would actually reach Europe would not be inconsequential.

LNG infrastructure in Europe would provide ability for the U.S. LNG to feed into the market whenever price disruptions emerge. As such it would provide a price floor and protection from extraction of economic rents by a dominant supplier.

In addition, the deliveries would neutralize geopolitical influence Russia as such supplier has yielded (also a major win for the U.S.).  In economic terms, activating more LNG capacity and more potential demand, would be beneficial for U.S. LNG producers. Even if their products never reach European shores, European LNG demand it will impact the industry via displacement: non-U.S. LNG delivered to Europe makes space for U.S deliveries elsewhere, including China or India, for example.

[safe_summary] => ) ) ) [taxonomy_wp_blog_tags] => Array ( ) [field_intro_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 2804 [uid] => 118 [filename] => 1028854607.jpg [uri] => public://1028854607.jpg [filemime] => image/jpeg [filesize] => 94892 [status] => 1 [timestamp] => 1533068142 [focus_rect] => [crop_rect] => [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 1000 [height] => 541 ) ) ) [field_blog_author] => Array ( [und] => Array ( [0] => Array ( [value] => Anna Mikulska [format] => [safe_value] => Anna Mikulska ) ) ) [field_image_caption] => Array ( [und] => Array ( [0] => Array ( [value] => Source: Sputnik International [format] => [safe_value] => Source: Sputnik International ) ) ) [field_set_as_featured_] => Array ( [und] => Array ( [0] => Array ( [value] => no ) ) ) [field_authors] => Array ( [und] => Array ( [0] => Array ( [target_id] => 1741 ) ) ) [field_addthis] => Array ( [und] => Array ( [0] => Array ( [value] => Dummy value ) ) ) [field_teaser] => Array ( [und] => Array ( [0] => Array ( [value] =>

The recent LNG agreement may not have teeth, but it might have impact.

[format] => full_html [safe_value] =>

The recent LNG agreement may not have teeth, but it might have impact.

) ) ) [field_primary_theme] => Array ( [und] => Array ( [0] => Array ( [tid] => 203 ) ) ) [field_secondary_themes] => Array ( [und] => Array ( [0] => Array ( [tid] => 204 ) ) ) [field_exclude] => Array ( [und] => Array ( [0] => Array ( [value] => 0 ) ) ) [field_more_like_this] => Array ( [und] => Array ( [0] => Array ( [target_id] => 4612 [entity] => stdClass Object ( [vid] => 8246 [uid] => 118 [title] => Yamal LNG – A Big Win for Russian Gas? [log] => [status] => 1 [comment] => 1 [promote] => 0 [sticky] => 0 [nid] => 4612 [type] => wp_blog [language] => und [created] => 1515604279 [changed] => 1531354760 [tnid] => 0 [translate] => 0 [revision_timestamp] => 1531354760 [revision_uid] => 1 [body] => Array ( [und] => Array ( [0] => Array ( [value] =>

On December 8, a first LNG cargo left Russia’s Yamal Peninsula. The event has been considered a great win not only by Yamal LNG shareholders but also by the Russian government, which sees the project as a first step to Russia’s becoming the world’s top LNG player. Yamal LNG was completed on time despite difficult Arctic conditions and technological and financial difficulties compounded by U.S. sanctions. But, as it often happens, the reality and the effects of Russia’s new endeavor are more nuanced.

To begin, Yamal LNG has not been the first Russian LNG facility. The first one—Sakhalin 2—has been operating since 2009, delivering LNG mainly to the Asia-Pacific region. The project has been managed by state-owned Gazprom, until recently, the only Russian company allowed to export natural gas.

In 2013, the Russian government allowed Russian companies other than Gazprom to export natural gas but only in the form of LNG while keeping Gazprom export monopoly in piped gas. The decision allowed Novatek, a private Russian company, to pursue the Yamal project.

The project was completed on time despite significant headwinds caused by U.S. sanctions, which have blocked technology transfer and made financing of the investment extremely difficult. But at the end, Novatek was able to secure both financing and technology transfer thanks to collaboration with France’s Total, China’s National Petroleum Corportation and China’s Silk Road Fund. But the project could not be successful if not for significant support from the Russian government, which extended a 12-year Mineral Extraction Tax holiday toward the project, subsidized part of construction activity, and exempted LNG from export taxes.

Yamal’s success stands in stark contrast to the failure of LNG projects planned by Russian national companies Gazprom and Rosneft.  As a result, Novatek has grown to Russia’s LNG leader—protected but not owned by the Russian government. This realization should give pause to Gazprom, particularly as it considers its position in Europe.

Similar to Sakhalin 2, Yamal LNG is focused on LNG delivery to Asia. However, due to Arctic conditions it is only able to do so directly during the summer months. Over the remaining part of the year, Yamal LNG will take a longer delivery route via Europe. Such availability of Yamal LNG in Europe over the cold period—when natural gas is particularly in demand—bodes well for the European market and EU’s push toward energy security and diversification of supply.

But this does not bode well for Gazprom’s position in Europe, as its list of competitors will expand from Norway, Qatar, and the U.S. to include also a Russian company. The pressure is even greater when one considers the pushback Gazprom has faced in Europe with respect to the company’s vertical structure and monopolistic practices,

The pushback institutionalized within the EU’s Third Energy Package has been visible on many levels, including: 1) difficulties to acquire a permit for a second set of pipelines (Nord Stream 2) that would bring more Russian gas under the Baltic Sea directly to Germany;  2) active litigation against Gazprom’s monopolistic practices, and 3) new infrastructure projects that involve new pipeline interconnectors and LNG import facilities that diversify European supply, .

All of the above make access to the European market increasingly difficult for Gazprom, but these conditions do help other natural gas suppliers, including Yamal LNG, which needs a winter home for its gas during the time when Artic temperatures limit direct delivery to Asia. As a result, Gazprom and Novatek may end up competing for the same market, which may undermine Gazprom’s market position, and potentially reduce Russia’s geopolitical influence in regions most dependent on Russian gas.

To sum up, Novatek’s Yamal LNG has been an undisputed accomplishment, but it is unclear whether it will have a net positive influence on Russia’s position in natural gas exports. It seems that Novatek’s gain can become Gazprom’s loss—if not Russia’s loss—in Europe and possibly beyond.

[summary] => [format] => full_html [safe_value] =>

On December 8, a first LNG cargo left Russia’s Yamal Peninsula. The event has been considered a great win not only by Yamal LNG shareholders but also by the Russian government, which sees the project as a first step to Russia’s becoming the world’s top LNG player. Yamal LNG was completed on time despite difficult Arctic conditions and technological and financial difficulties compounded by U.S. sanctions. But, as it often happens, the reality and the effects of Russia’s new endeavor are more nuanced.

To begin, Yamal LNG has not been the first Russian LNG facility. The first one—Sakhalin 2—has been operating since 2009, delivering LNG mainly to the Asia-Pacific region. The project has been managed by state-owned Gazprom, until recently, the only Russian company allowed to export natural gas.

In 2013, the Russian government allowed Russian companies other than Gazprom to export natural gas but only in the form of LNG while keeping Gazprom export monopoly in piped gas. The decision allowed Novatek, a private Russian company, to pursue the Yamal project.

The project was completed on time despite significant headwinds caused by U.S. sanctions, which have blocked technology transfer and made financing of the investment extremely difficult. But at the end, Novatek was able to secure both financing and technology transfer thanks to collaboration with France’s Total, China’s National Petroleum Corportation and China’s Silk Road Fund. But the project could not be successful if not for significant support from the Russian government, which extended a 12-year Mineral Extraction Tax holiday toward the project, subsidized part of construction activity, and exempted LNG from export taxes.

Yamal’s success stands in stark contrast to the failure of LNG projects planned by Russian national companies Gazprom and Rosneft.  As a result, Novatek has grown to Russia’s LNG leader—protected but not owned by the Russian government. This realization should give pause to Gazprom, particularly as it considers its position in Europe.

Similar to Sakhalin 2, Yamal LNG is focused on LNG delivery to Asia. However, due to Arctic conditions it is only able to do so directly during the summer months. Over the remaining part of the year, Yamal LNG will take a longer delivery route via Europe. Such availability of Yamal LNG in Europe over the cold period—when natural gas is particularly in demand—bodes well for the European market and EU’s push toward energy security and diversification of supply.

But this does not bode well for Gazprom’s position in Europe, as its list of competitors will expand from Norway, Qatar, and the U.S. to include also a Russian company. The pressure is even greater when one considers the pushback Gazprom has faced in Europe with respect to the company’s vertical structure and monopolistic practices,

The pushback institutionalized within the EU’s Third Energy Package has been visible on many levels, including: 1) difficulties to acquire a permit for a second set of pipelines (Nord Stream 2) that would bring more Russian gas under the Baltic Sea directly to Germany;  2) active litigation against Gazprom’s monopolistic practices, and 3) new infrastructure projects that involve new pipeline interconnectors and LNG import facilities that diversify European supply, .

All of the above make access to the European market increasingly difficult for Gazprom, but these conditions do help other natural gas suppliers, including Yamal LNG, which needs a winter home for its gas during the time when Artic temperatures limit direct delivery to Asia. As a result, Gazprom and Novatek may end up competing for the same market, which may undermine Gazprom’s market position, and potentially reduce Russia’s geopolitical influence in regions most dependent on Russian gas.

To sum up, Novatek’s Yamal LNG has been an undisputed accomplishment, but it is unclear whether it will have a net positive influence on Russia’s position in natural gas exports. It seems that Novatek’s gain can become Gazprom’s loss—if not Russia’s loss—in Europe and possibly beyond.

[safe_summary] => ) ) ) [taxonomy_wp_blog_tags] => Array ( ) [field_intro_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 2390 [uid] => 118 [filename] => 59e71f13fc7e93670a8b4567.jpg [uri] => public://59e71f13fc7e93670a8b4567.jpg [filemime] => image/jpeg [filesize] => 107658 [status] => 1 [timestamp] => 1515604279 [focus_rect] => [crop_rect] => [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 790 [height] => 444 ) ) ) [field_blog_author] => Array ( [und] => Array ( [0] => Array ( [value] => Anna Mikulska [format] => [safe_value] => Anna Mikulska ) ) ) [field_image_caption] => Array ( [und] => Array ( [0] => Array ( [value] => Photo via: RT.com [format] => [safe_value] => Photo via: RT.com ) ) ) [field_set_as_featured_] => Array ( [und] => Array ( [0] => Array ( [value] => no ) ) ) [field_authors] => Array ( [und] => Array ( [0] => Array ( [target_id] => 1741 ) ) ) [field_addthis] => Array ( [und] => Array ( [0] => Array ( [value] => Dummy value ) ) ) [field_teaser] => Array ( ) [field_primary_theme] => Array ( ) [field_secondary_themes] => Array ( ) [field_exclude] => Array ( ) [field_more_like_this] => Array ( ) [field_show_cropped_image] => Array ( [und] => Array ( [0] => Array ( [value] => 1 ) ) ) [metatags] => Array ( [und] => Array ( [article:published_time] => Array ( ) [article:modified_time] => Array ( ) ) ) [rdf_mapping] => Array ( [rdftype] => Array ( [0] => sioc:Item [1] => foaf:Document ) [title] => Array ( [predicates] => Array ( [0] => dc:title ) ) [created] => Array ( [predicates] => Array ( [0] => dc:date [1] => dc:created ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [changed] => Array ( [predicates] => Array ( [0] => dc:modified ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [body] => Array ( [predicates] => Array ( [0] => content:encoded ) ) [uid] => Array ( [predicates] => Array ( [0] => sioc:has_creator ) [type] => rel ) [name] => Array ( [predicates] => Array ( [0] => foaf:name ) ) [comment_count] => Array ( [predicates] => Array ( [0] => sioc:num_replies ) [datatype] => xsd:integer ) [last_activity] => Array ( [predicates] => Array ( [0] => sioc:last_activity_date ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) ) [path] => Array ( [pathauto] => 1 ) [cid] => 0 [last_comment_timestamp] => 1515604279 [last_comment_name] => [last_comment_uid] => 118 [comment_count] => 0 [name] => mollie [picture] => 0 [data] => b:0; ) [access] => 1 ) [1] => Array ( [target_id] => 3231 [entity] => stdClass Object ( [vid] => 4205 [uid] => 10 [title] => How U.S. LNG is Changing the Global Gas Market [log] => [status] => 1 [comment] => 1 [promote] => 0 [sticky] => 0 [nid] => 3231 [type] => podcast [language] => und [created] => 1488258000 [changed] => 1530890595 [tnid] => 0 [translate] => 0 [revision_timestamp] => 1530890595 [revision_uid] => 10 [body] => Array ( [und] => Array ( [0] => Array ( [value] =>

In 2016 the first shipment of U.S. liquefied natural gas left by tanker from a terminal on the Gulf coast.  In the year since, U.S. LNG has made its way to customers around the globe, increasing competition in the gas market and threatening to loosen the grip of some suppliers on captive markets.

Guest Anna Mikulska, Senior Fellow at the Kleinman Center for Energy Policy, talks about the globalization of the natural gas market, the competitiveness of U.S. exports and their implications for relationships abroad.

 

[summary] => [format] => full_html [safe_value] =>

In 2016 the first shipment of U.S. liquefied natural gas left by tanker from a terminal on the Gulf coast.  In the year since, U.S. LNG has made its way to customers around the globe, increasing competition in the gas market and threatening to loosen the grip of some suppliers on captive markets.

Guest Anna Mikulska, Senior Fellow at the Kleinman Center for Energy Policy, talks about the globalization of the natural gas market, the competitiveness of U.S. exports and their implications for relationships abroad.

 

[safe_summary] => ) ) ) [field_date] => Array ( [und] => Array ( [0] => Array ( [value] => 2017-02-28 00:00:00 [timezone] => America/New_York [timezone_db] => America/New_York [date_type] => datetime ) ) ) [field_episode] => Array ( [und] => Array ( [0] => Array ( [value] => EPN07 [format] => [safe_value] => EPN07 ) ) ) [field_episode_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 1673 [uid] => 10 [filename] => EPN 07 Square.jpg [uri] => public://epn_image/EPN 07 Square.jpg [filemime] => image/jpeg [filesize] => 162022 [status] => 1 [timestamp] => 1488221733 [focus_rect] => [crop_rect] => [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 500 [height] => 500 ) ) ) [field_player] => Array ( [und] => Array ( [0] => Array ( [value] => [format] => no_editor [safe_value] => ) ) ) [field_teaser] => Array ( [und] => Array ( [0] => Array ( [value] =>

U.S. natural gas exports are helping to globalize the gas market, putting traditional buyer-seller relationships to the test and raising the possibility of far-reaching geopolitical consequences.

[format] => full_html [safe_value] =>

U.S. natural gas exports are helping to globalize the gas market, putting traditional buyer-seller relationships to the test and raising the possibility of far-reaching geopolitical consequences.

) ) ) [field_top_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 1675 [uid] => 10 [filename] => arctic_princess-9271248-lng_tanker-ship-222.jpg [uri] => public://top_image/arctic_princess-9271248-lng_tanker-ship-222.jpg [filemime] => image/jpeg [filesize] => 1571110 [status] => 1 [timestamp] => 1488221733 [focus_rect] => 0,123,1800,642 [crop_rect] => 0,123,1800,642 [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 1800 [height] => 1350 ) ) ) [field_embed_small] => Array ( [und] => Array ( [0] => Array ( [value] => [format] => no_editor [safe_value] => ) ) ) [field_teaser_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 1674 [uid] => 10 [filename] => arctic_princess-9271248-lng_tanker-ship-222.jpg [uri] => public://arctic_princess-9271248-lng_tanker-ship-222.jpg [filemime] => image/jpeg [filesize] => 356661 [status] => 1 [timestamp] => 1488221733 [focus_rect] => 190,0,429,428 [crop_rect] => 190,0,429,428 [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 800 [height] => 600 ) ) ) [field_set_as_featured_] => Array ( ) [field_authors] => Array ( [und] => Array ( [0] => Array ( [target_id] => 1741 ) ) ) [field_addthis] => Array ( [und] => Array ( [0] => Array ( [value] => Dummy value ) ) ) [field_primary_theme] => Array ( [und] => Array ( [0] => Array ( [tid] => 203 ) ) ) [field_secondary_themes] => Array ( [und] => Array ( [0] => Array ( [tid] => 204 ) ) ) [field_exclude] => Array ( [und] => Array ( [0] => Array ( [value] => 0 ) ) ) [field_more_like_this] => Array ( [und] => Array ( [0] => Array ( [target_id] => 2380 ) [1] => Array ( [target_id] => 6148 ) [2] => Array ( [target_id] => 4612 ) ) ) [metatags] => Array ( [und] => Array ( [og:image] => Array ( [value] => public://top_image/arctic_princess-9271248-lng_tanker-ship-222.jpg ) [article:author] => Array ( ) [article:publisher] => Array ( ) [article:section] => Array ( ) [article:tag] => Array ( ) [article:published_time] => Array ( ) [article:modified_time] => Array ( ) [article:expiration_time] => Array ( ) [profile:first_name] => Array ( ) [profile:last_name] => Array ( ) [profile:username] => Array ( ) [profile:gender] => Array ( ) [book:author] => Array ( ) [book:isbn] => Array ( ) [book:release_date] => Array ( ) [book:tag] => Array ( ) [video:actor] => Array ( ) [video:actor:role] => Array ( ) [video:director] => Array ( ) [video:writer] => Array ( ) [video:duration] => Array ( ) [video:release_date] => Array ( ) [video:tag] => Array ( ) [video:series] => Array ( ) ) ) [rdf_mapping] => Array ( [rdftype] => Array ( [0] => sioc:Item [1] => foaf:Document ) [title] => Array ( [predicates] => Array ( [0] => dc:title ) ) [created] => Array ( [predicates] => Array ( [0] => dc:date [1] => dc:created ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [changed] => Array ( [predicates] => Array ( [0] => dc:modified ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [body] => Array ( [predicates] => Array ( [0] => content:encoded ) ) [uid] => Array ( [predicates] => Array ( [0] => sioc:has_creator ) [type] => rel ) [name] => Array ( [predicates] => Array ( [0] => foaf:name ) ) [comment_count] => Array ( [predicates] => Array ( [0] => sioc:num_replies ) [datatype] => xsd:integer ) [last_activity] => Array ( [predicates] => Array ( [0] => sioc:last_activity_date ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) ) [path] => Array ( [pathauto] => 1 ) [cid] => 0 [last_comment_timestamp] => 1488221733 [last_comment_name] => [last_comment_uid] => 10 [comment_count] => 0 [name] => bill [picture] => 0 [data] => b:0; ) [access] => 1 ) ) ) [field_show_cropped_image] => Array ( [und] => Array ( [0] => Array ( [value] => 1 ) ) ) [metatags] => Array ( [und] => Array ( [og:image] => Array ( [value] => ) [article:author] => Array ( ) [article:publisher] => Array ( ) [article:section] => Array ( ) [article:tag] => Array ( ) [article:published_time] => Array ( ) [article:modified_time] => Array ( ) [article:expiration_time] => Array ( ) [profile:first_name] => Array ( ) [profile:last_name] => Array ( ) [profile:username] => Array ( ) [profile:gender] => Array ( ) [book:author] => Array ( ) [book:isbn] => Array ( ) [book:release_date] => Array ( ) [book:tag] => Array ( ) [video:actor] => Array ( ) [video:actor:role] => Array ( ) [video:director] => Array ( ) [video:writer] => Array ( ) [video:duration] => Array ( ) [video:release_date] => Array ( ) [video:tag] => Array ( ) [video:series] => Array ( ) ) ) [rdf_mapping] => Array ( [rdftype] => Array ( [0] => sioc:Item [1] => foaf:Document ) [title] => Array ( [predicates] => Array ( [0] => dc:title ) ) [created] => Array ( [predicates] => Array ( [0] => dc:date [1] => dc:created ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [changed] => Array ( [predicates] => Array ( [0] => dc:modified ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [body] => Array ( [predicates] => Array ( [0] => content:encoded ) ) [uid] => Array ( [predicates] => Array ( [0] => sioc:has_creator ) [type] => rel ) [name] => Array ( [predicates] => Array ( [0] => foaf:name ) ) [comment_count] => Array ( [predicates] => Array ( [0] => sioc:num_replies ) [datatype] => xsd:integer ) [last_activity] => Array ( [predicates] => Array ( [0] => sioc:last_activity_date ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) ) [path] => Array ( [pathauto] => 1 ) [cid] => 0 [last_comment_timestamp] => 1533067977 [last_comment_name] => [last_comment_uid] => 118 [comment_count] => 0 [name] => mollie [picture] => 0 [data] => b:0; [entity_view_prepared] => 1 ) [#items] => Array ( [0] => Array ( [value] => Anna Mikulska [format] => [safe_value] => Anna Mikulska ) ) [#formatter] => text_default [0] => Array ( [#markup] => Anna Mikulska ) ) [links] => Array ( [#theme] => links__node [#pre_render] => Array ( [0] => drupal_pre_render_links ) [#attributes] => Array ( [class] => Array ( [0] => links [1] => inline ) ) [node] => Array ( [#theme] => links__node__node [#links] => Array ( ) [#attributes] => Array ( [class] => Array ( [0] => links [1] => inline ) ) ) [comment] => Array ( [#theme] => links__node__comment [#links] => Array ( ) [#attributes] => Array ( [class] => Array ( [0] => links [1] => inline ) ) ) ) [comments] => Array ( ) [field_intro_image] => Array ( [#theme] => field [#weight] => 1 [#title] => Intro Image [#access] => 1 [#label_display] => hidden [#view_mode] => full [#language] => und [#field_name] => field_intro_image [#field_type] => image [#field_translatable] => 0 [#entity_type] => node [#bundle] => wp_blog [#object] => stdClass Object ( [vid] => 8775 [uid] => 118 [title] => A Closer Look at the Trump and Juncker Agreement [log] => [status] => 1 [comment] => 1 [promote] => 0 [sticky] => 0 [nid] => 6636 [type] => wp_blog [language] => und [created] => 1533067977 [changed] => 1533127312 [tnid] => 0 [translate] => 0 [revision_timestamp] => 1533127312 [revision_uid] => 90 [body] => Array ( [und] => Array ( [0] => Array ( [value] =>

Last week, in an effort to prevent a possible trade war over U.S. steel and aluminum tariffs, the President of the European Commission (EC) Jean-Claude Juncker met in Washington with U.S. President Donald Trump. They struck an agreement about Europe buying more U.S. LNG. But as noted by many analysts, neither side can really make this happen.

The agreement includes very few details: Juncker committed Europe to significantly increase their volume of U.S. LNG imports, while Trump agreed to send more. Yet neither person making the promises has much influence on fulfilling them. The LNG that originates from U.S. coasts does not belong to the U.S. government but to profit-seeking private companies. The U.S. government can encourage LNG production—by providing a hospitable regulatory and legal environment—but it cannot force companies to send products to a specific region or country.

On his part, Juncker represents the EU but is ultimately dependent on individual EU member decisions. The EU cannot force its members to import U.S. LNG, but it can motivate or make it possible through investment in and financing of LNG infrastructure.

Going further, analysts are not sure whether additional LNG importing capacity would ultimately attract U.S. LNG. Some point to the existing capacity that is currently underused, a result of inadequate LNG demand and LNG prices that are high in comparison to the piped Russian gas. In addition, there is the question of LNG competition from cheaper and/or more proximate producers such as Norway, Qatar or, most recently, Russia.

Today’s U.S. producers are lured to Asia, where higher prices provide higher profit margins. Thus, even if more terminals are built, it is not a given that these terminals will maximize capacity or draw LNG from the U.S.

In the meantime, Russia has noted record-level highs in natural gas delivery to Europe in 2016 and 2017. And new, more secure transport routes are being built (Nord Stream 2, Turkish Stream) to deliver the abundant and low-cost Russian gas to Europe.

But while Juncker’s promise of large U.S. LNG imports may never materialize, his commitment to building new LNG terminals may actually be an important part of the U.S.-EU natural gas and energy security strategy.

Strategically placed (see Figure 1), new terminals could impact Russian pipeline gas deliveries—if not in volume, then at least in price—while dulling the geopolitical benefits Russia is deriving from its dominant supplier position. My recent research with Gabriel Collins identifies in detail the elements needed to achieve this goal. In a nutshell, the EU must:

  1. Build terminals in areas that are currently highly dependent on Russian gas;
  2. Ramp up underutilized LNG import capacity—with pipelines and interconnectors that take gas into areas that lack gas diversity;
  3. Push harder for market-based rules to govern the natural gas market within EU member states, to encourage competition and spawn interest from U.S. LNG producers.

Figure 1. Priority Zones for Geoeconomic Gas Investments 

Source: Collins & Mikulska, 2018.

Would all this bring a rush of U.S. LNG onto the European shores?

Unlikely. U.S. LNG is expected to continue to flow to Asia, where prices and demand are advantageous for U.S. producers.

But as much or as little of the U.S. LNG that would actually reach Europe would not be inconsequential.

LNG infrastructure in Europe would provide ability for the U.S. LNG to feed into the market whenever price disruptions emerge. As such it would provide a price floor and protection from extraction of economic rents by a dominant supplier.

In addition, the deliveries would neutralize geopolitical influence Russia as such supplier has yielded (also a major win for the U.S.).  In economic terms, activating more LNG capacity and more potential demand, would be beneficial for U.S. LNG producers. Even if their products never reach European shores, European LNG demand it will impact the industry via displacement: non-U.S. LNG delivered to Europe makes space for U.S deliveries elsewhere, including China or India, for example.

[summary] => [format] => full_html [safe_value] =>

Last week, in an effort to prevent a possible trade war over U.S. steel and aluminum tariffs, the President of the European Commission (EC) Jean-Claude Juncker met in Washington with U.S. President Donald Trump. They struck an agreement about Europe buying more U.S. LNG. But as noted by many analysts, neither side can really make this happen.

The agreement includes very few details: Juncker committed Europe to significantly increase their volume of U.S. LNG imports, while Trump agreed to send more. Yet neither person making the promises has much influence on fulfilling them. The LNG that originates from U.S. coasts does not belong to the U.S. government but to profit-seeking private companies. The U.S. government can encourage LNG production—by providing a hospitable regulatory and legal environment—but it cannot force companies to send products to a specific region or country.

On his part, Juncker represents the EU but is ultimately dependent on individual EU member decisions. The EU cannot force its members to import U.S. LNG, but it can motivate or make it possible through investment in and financing of LNG infrastructure.

Going further, analysts are not sure whether additional LNG importing capacity would ultimately attract U.S. LNG. Some point to the existing capacity that is currently underused, a result of inadequate LNG demand and LNG prices that are high in comparison to the piped Russian gas. In addition, there is the question of LNG competition from cheaper and/or more proximate producers such as Norway, Qatar or, most recently, Russia.

Today’s U.S. producers are lured to Asia, where higher prices provide higher profit margins. Thus, even if more terminals are built, it is not a given that these terminals will maximize capacity or draw LNG from the U.S.

In the meantime, Russia has noted record-level highs in natural gas delivery to Europe in 2016 and 2017. And new, more secure transport routes are being built (Nord Stream 2, Turkish Stream) to deliver the abundant and low-cost Russian gas to Europe.

But while Juncker’s promise of large U.S. LNG imports may never materialize, his commitment to building new LNG terminals may actually be an important part of the U.S.-EU natural gas and energy security strategy.

Strategically placed (see Figure 1), new terminals could impact Russian pipeline gas deliveries—if not in volume, then at least in price—while dulling the geopolitical benefits Russia is deriving from its dominant supplier position. My recent research with Gabriel Collins identifies in detail the elements needed to achieve this goal. In a nutshell, the EU must:

  1. Build terminals in areas that are currently highly dependent on Russian gas;
  2. Ramp up underutilized LNG import capacity—with pipelines and interconnectors that take gas into areas that lack gas diversity;
  3. Push harder for market-based rules to govern the natural gas market within EU member states, to encourage competition and spawn interest from U.S. LNG producers.

Figure 1. Priority Zones for Geoeconomic Gas Investments 

Source: Collins & Mikulska, 2018.

Would all this bring a rush of U.S. LNG onto the European shores?

Unlikely. U.S. LNG is expected to continue to flow to Asia, where prices and demand are advantageous for U.S. producers.

But as much or as little of the U.S. LNG that would actually reach Europe would not be inconsequential.

LNG infrastructure in Europe would provide ability for the U.S. LNG to feed into the market whenever price disruptions emerge. As such it would provide a price floor and protection from extraction of economic rents by a dominant supplier.

In addition, the deliveries would neutralize geopolitical influence Russia as such supplier has yielded (also a major win for the U.S.).  In economic terms, activating more LNG capacity and more potential demand, would be beneficial for U.S. LNG producers. Even if their products never reach European shores, European LNG demand it will impact the industry via displacement: non-U.S. LNG delivered to Europe makes space for U.S deliveries elsewhere, including China or India, for example.

[safe_summary] => ) ) ) [taxonomy_wp_blog_tags] => Array ( ) [field_intro_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 2804 [uid] => 118 [filename] => 1028854607.jpg [uri] => public://1028854607.jpg [filemime] => image/jpeg [filesize] => 94892 [status] => 1 [timestamp] => 1533068142 [focus_rect] => [crop_rect] => [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 1000 [height] => 541 ) ) ) [field_blog_author] => Array ( [und] => Array ( [0] => Array ( [value] => Anna Mikulska [format] => [safe_value] => Anna Mikulska ) ) ) [field_image_caption] => Array ( [und] => Array ( [0] => Array ( [value] => Source: Sputnik International [format] => [safe_value] => Source: Sputnik International ) ) ) [field_set_as_featured_] => Array ( [und] => Array ( [0] => Array ( [value] => no ) ) ) [field_authors] => Array ( [und] => Array ( [0] => Array ( [target_id] => 1741 ) ) ) [field_addthis] => Array ( [und] => Array ( [0] => Array ( [value] => Dummy value ) ) ) [field_teaser] => Array ( [und] => Array ( [0] => Array ( [value] =>

The recent LNG agreement may not have teeth, but it might have impact.

[format] => full_html [safe_value] =>

The recent LNG agreement may not have teeth, but it might have impact.

) ) ) [field_primary_theme] => Array ( [und] => Array ( [0] => Array ( [tid] => 203 ) ) ) [field_secondary_themes] => Array ( [und] => Array ( [0] => Array ( [tid] => 204 ) ) ) [field_exclude] => Array ( [und] => Array ( [0] => Array ( [value] => 0 ) ) ) [field_more_like_this] => Array ( [und] => Array ( [0] => Array ( [target_id] => 4612 [entity] => stdClass Object ( [vid] => 8246 [uid] => 118 [title] => Yamal LNG – A Big Win for Russian Gas? [log] => [status] => 1 [comment] => 1 [promote] => 0 [sticky] => 0 [nid] => 4612 [type] => wp_blog [language] => und [created] => 1515604279 [changed] => 1531354760 [tnid] => 0 [translate] => 0 [revision_timestamp] => 1531354760 [revision_uid] => 1 [body] => Array ( [und] => Array ( [0] => Array ( [value] =>

On December 8, a first LNG cargo left Russia’s Yamal Peninsula. The event has been considered a great win not only by Yamal LNG shareholders but also by the Russian government, which sees the project as a first step to Russia’s becoming the world’s top LNG player. Yamal LNG was completed on time despite difficult Arctic conditions and technological and financial difficulties compounded by U.S. sanctions. But, as it often happens, the reality and the effects of Russia’s new endeavor are more nuanced.

To begin, Yamal LNG has not been the first Russian LNG facility. The first one—Sakhalin 2—has been operating since 2009, delivering LNG mainly to the Asia-Pacific region. The project has been managed by state-owned Gazprom, until recently, the only Russian company allowed to export natural gas.

In 2013, the Russian government allowed Russian companies other than Gazprom to export natural gas but only in the form of LNG while keeping Gazprom export monopoly in piped gas. The decision allowed Novatek, a private Russian company, to pursue the Yamal project.

The project was completed on time despite significant headwinds caused by U.S. sanctions, which have blocked technology transfer and made financing of the investment extremely difficult. But at the end, Novatek was able to secure both financing and technology transfer thanks to collaboration with France’s Total, China’s National Petroleum Corportation and China’s Silk Road Fund. But the project could not be successful if not for significant support from the Russian government, which extended a 12-year Mineral Extraction Tax holiday toward the project, subsidized part of construction activity, and exempted LNG from export taxes.

Yamal’s success stands in stark contrast to the failure of LNG projects planned by Russian national companies Gazprom and Rosneft.  As a result, Novatek has grown to Russia’s LNG leader—protected but not owned by the Russian government. This realization should give pause to Gazprom, particularly as it considers its position in Europe.

Similar to Sakhalin 2, Yamal LNG is focused on LNG delivery to Asia. However, due to Arctic conditions it is only able to do so directly during the summer months. Over the remaining part of the year, Yamal LNG will take a longer delivery route via Europe. Such availability of Yamal LNG in Europe over the cold period—when natural gas is particularly in demand—bodes well for the European market and EU’s push toward energy security and diversification of supply.

But this does not bode well for Gazprom’s position in Europe, as its list of competitors will expand from Norway, Qatar, and the U.S. to include also a Russian company. The pressure is even greater when one considers the pushback Gazprom has faced in Europe with respect to the company’s vertical structure and monopolistic practices,

The pushback institutionalized within the EU’s Third Energy Package has been visible on many levels, including: 1) difficulties to acquire a permit for a second set of pipelines (Nord Stream 2) that would bring more Russian gas under the Baltic Sea directly to Germany;  2) active litigation against Gazprom’s monopolistic practices, and 3) new infrastructure projects that involve new pipeline interconnectors and LNG import facilities that diversify European supply, .

All of the above make access to the European market increasingly difficult for Gazprom, but these conditions do help other natural gas suppliers, including Yamal LNG, which needs a winter home for its gas during the time when Artic temperatures limit direct delivery to Asia. As a result, Gazprom and Novatek may end up competing for the same market, which may undermine Gazprom’s market position, and potentially reduce Russia’s geopolitical influence in regions most dependent on Russian gas.

To sum up, Novatek’s Yamal LNG has been an undisputed accomplishment, but it is unclear whether it will have a net positive influence on Russia’s position in natural gas exports. It seems that Novatek’s gain can become Gazprom’s loss—if not Russia’s loss—in Europe and possibly beyond.

[summary] => [format] => full_html [safe_value] =>

On December 8, a first LNG cargo left Russia’s Yamal Peninsula. The event has been considered a great win not only by Yamal LNG shareholders but also by the Russian government, which sees the project as a first step to Russia’s becoming the world’s top LNG player. Yamal LNG was completed on time despite difficult Arctic conditions and technological and financial difficulties compounded by U.S. sanctions. But, as it often happens, the reality and the effects of Russia’s new endeavor are more nuanced.

To begin, Yamal LNG has not been the first Russian LNG facility. The first one—Sakhalin 2—has been operating since 2009, delivering LNG mainly to the Asia-Pacific region. The project has been managed by state-owned Gazprom, until recently, the only Russian company allowed to export natural gas.

In 2013, the Russian government allowed Russian companies other than Gazprom to export natural gas but only in the form of LNG while keeping Gazprom export monopoly in piped gas. The decision allowed Novatek, a private Russian company, to pursue the Yamal project.

The project was completed on time despite significant headwinds caused by U.S. sanctions, which have blocked technology transfer and made financing of the investment extremely difficult. But at the end, Novatek was able to secure both financing and technology transfer thanks to collaboration with France’s Total, China’s National Petroleum Corportation and China’s Silk Road Fund. But the project could not be successful if not for significant support from the Russian government, which extended a 12-year Mineral Extraction Tax holiday toward the project, subsidized part of construction activity, and exempted LNG from export taxes.

Yamal’s success stands in stark contrast to the failure of LNG projects planned by Russian national companies Gazprom and Rosneft.  As a result, Novatek has grown to Russia’s LNG leader—protected but not owned by the Russian government. This realization should give pause to Gazprom, particularly as it considers its position in Europe.

Similar to Sakhalin 2, Yamal LNG is focused on LNG delivery to Asia. However, due to Arctic conditions it is only able to do so directly during the summer months. Over the remaining part of the year, Yamal LNG will take a longer delivery route via Europe. Such availability of Yamal LNG in Europe over the cold period—when natural gas is particularly in demand—bodes well for the European market and EU’s push toward energy security and diversification of supply.

But this does not bode well for Gazprom’s position in Europe, as its list of competitors will expand from Norway, Qatar, and the U.S. to include also a Russian company. The pressure is even greater when one considers the pushback Gazprom has faced in Europe with respect to the company’s vertical structure and monopolistic practices,

The pushback institutionalized within the EU’s Third Energy Package has been visible on many levels, including: 1) difficulties to acquire a permit for a second set of pipelines (Nord Stream 2) that would bring more Russian gas under the Baltic Sea directly to Germany;  2) active litigation against Gazprom’s monopolistic practices, and 3) new infrastructure projects that involve new pipeline interconnectors and LNG import facilities that diversify European supply, .

All of the above make access to the European market increasingly difficult for Gazprom, but these conditions do help other natural gas suppliers, including Yamal LNG, which needs a winter home for its gas during the time when Artic temperatures limit direct delivery to Asia. As a result, Gazprom and Novatek may end up competing for the same market, which may undermine Gazprom’s market position, and potentially reduce Russia’s geopolitical influence in regions most dependent on Russian gas.

To sum up, Novatek’s Yamal LNG has been an undisputed accomplishment, but it is unclear whether it will have a net positive influence on Russia’s position in natural gas exports. It seems that Novatek’s gain can become Gazprom’s loss—if not Russia’s loss—in Europe and possibly beyond.

[safe_summary] => ) ) ) [taxonomy_wp_blog_tags] => Array ( ) [field_intro_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 2390 [uid] => 118 [filename] => 59e71f13fc7e93670a8b4567.jpg [uri] => public://59e71f13fc7e93670a8b4567.jpg [filemime] => image/jpeg [filesize] => 107658 [status] => 1 [timestamp] => 1515604279 [focus_rect] => [crop_rect] => [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 790 [height] => 444 ) ) ) [field_blog_author] => Array ( [und] => Array ( [0] => Array ( [value] => Anna Mikulska [format] => [safe_value] => Anna Mikulska ) ) ) [field_image_caption] => Array ( [und] => Array ( [0] => Array ( [value] => Photo via: RT.com [format] => [safe_value] => Photo via: RT.com ) ) ) [field_set_as_featured_] => Array ( [und] => Array ( [0] => Array ( [value] => no ) ) ) [field_authors] => Array ( [und] => Array ( [0] => Array ( [target_id] => 1741 ) ) ) [field_addthis] => Array ( [und] => Array ( [0] => Array ( [value] => Dummy value ) ) ) [field_teaser] => Array ( ) [field_primary_theme] => Array ( ) [field_secondary_themes] => Array ( ) [field_exclude] => Array ( ) [field_more_like_this] => Array ( ) [field_show_cropped_image] => Array ( [und] => Array ( [0] => Array ( [value] => 1 ) ) ) [metatags] => Array ( [und] => Array ( [article:published_time] => Array ( ) [article:modified_time] => Array ( ) ) ) [rdf_mapping] => Array ( [rdftype] => Array ( [0] => sioc:Item [1] => foaf:Document ) [title] => Array ( [predicates] => Array ( [0] => dc:title ) ) [created] => Array ( [predicates] => Array ( [0] => dc:date [1] => dc:created ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [changed] => Array ( [predicates] => Array ( [0] => dc:modified ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [body] => Array ( [predicates] => Array ( [0] => content:encoded ) ) [uid] => Array ( [predicates] => Array ( [0] => sioc:has_creator ) [type] => rel ) [name] => Array ( [predicates] => Array ( [0] => foaf:name ) ) [comment_count] => Array ( [predicates] => Array ( [0] => sioc:num_replies ) [datatype] => xsd:integer ) [last_activity] => Array ( [predicates] => Array ( [0] => sioc:last_activity_date ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) ) [path] => Array ( [pathauto] => 1 ) [cid] => 0 [last_comment_timestamp] => 1515604279 [last_comment_name] => [last_comment_uid] => 118 [comment_count] => 0 [name] => mollie [picture] => 0 [data] => b:0; ) [access] => 1 ) [1] => Array ( [target_id] => 3231 [entity] => stdClass Object ( [vid] => 4205 [uid] => 10 [title] => How U.S. LNG is Changing the Global Gas Market [log] => [status] => 1 [comment] => 1 [promote] => 0 [sticky] => 0 [nid] => 3231 [type] => podcast [language] => und [created] => 1488258000 [changed] => 1530890595 [tnid] => 0 [translate] => 0 [revision_timestamp] => 1530890595 [revision_uid] => 10 [body] => Array ( [und] => Array ( [0] => Array ( [value] =>

In 2016 the first shipment of U.S. liquefied natural gas left by tanker from a terminal on the Gulf coast.  In the year since, U.S. LNG has made its way to customers around the globe, increasing competition in the gas market and threatening to loosen the grip of some suppliers on captive markets.

Guest Anna Mikulska, Senior Fellow at the Kleinman Center for Energy Policy, talks about the globalization of the natural gas market, the competitiveness of U.S. exports and their implications for relationships abroad.

 

[summary] => [format] => full_html [safe_value] =>

In 2016 the first shipment of U.S. liquefied natural gas left by tanker from a terminal on the Gulf coast.  In the year since, U.S. LNG has made its way to customers around the globe, increasing competition in the gas market and threatening to loosen the grip of some suppliers on captive markets.

Guest Anna Mikulska, Senior Fellow at the Kleinman Center for Energy Policy, talks about the globalization of the natural gas market, the competitiveness of U.S. exports and their implications for relationships abroad.

 

[safe_summary] => ) ) ) [field_date] => Array ( [und] => Array ( [0] => Array ( [value] => 2017-02-28 00:00:00 [timezone] => America/New_York [timezone_db] => America/New_York [date_type] => datetime ) ) ) [field_episode] => Array ( [und] => Array ( [0] => Array ( [value] => EPN07 [format] => [safe_value] => EPN07 ) ) ) [field_episode_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 1673 [uid] => 10 [filename] => EPN 07 Square.jpg [uri] => public://epn_image/EPN 07 Square.jpg [filemime] => image/jpeg [filesize] => 162022 [status] => 1 [timestamp] => 1488221733 [focus_rect] => [crop_rect] => [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 500 [height] => 500 ) ) ) [field_player] => Array ( [und] => Array ( [0] => Array ( [value] => [format] => no_editor [safe_value] => ) ) ) [field_teaser] => Array ( [und] => Array ( [0] => Array ( [value] =>

U.S. natural gas exports are helping to globalize the gas market, putting traditional buyer-seller relationships to the test and raising the possibility of far-reaching geopolitical consequences.

[format] => full_html [safe_value] =>

U.S. natural gas exports are helping to globalize the gas market, putting traditional buyer-seller relationships to the test and raising the possibility of far-reaching geopolitical consequences.

) ) ) [field_top_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 1675 [uid] => 10 [filename] => arctic_princess-9271248-lng_tanker-ship-222.jpg [uri] => public://top_image/arctic_princess-9271248-lng_tanker-ship-222.jpg [filemime] => image/jpeg [filesize] => 1571110 [status] => 1 [timestamp] => 1488221733 [focus_rect] => 0,123,1800,642 [crop_rect] => 0,123,1800,642 [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 1800 [height] => 1350 ) ) ) [field_embed_small] => Array ( [und] => Array ( [0] => Array ( [value] => [format] => no_editor [safe_value] => ) ) ) [field_teaser_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 1674 [uid] => 10 [filename] => arctic_princess-9271248-lng_tanker-ship-222.jpg [uri] => public://arctic_princess-9271248-lng_tanker-ship-222.jpg [filemime] => image/jpeg [filesize] => 356661 [status] => 1 [timestamp] => 1488221733 [focus_rect] => 190,0,429,428 [crop_rect] => 190,0,429,428 [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 800 [height] => 600 ) ) ) [field_set_as_featured_] => Array ( ) [field_authors] => Array ( [und] => Array ( [0] => Array ( [target_id] => 1741 ) ) ) [field_addthis] => Array ( [und] => Array ( [0] => Array ( [value] => Dummy value ) ) ) [field_primary_theme] => Array ( [und] => Array ( [0] => Array ( [tid] => 203 ) ) ) [field_secondary_themes] => Array ( [und] => Array ( [0] => Array ( [tid] => 204 ) ) ) [field_exclude] => Array ( [und] => Array ( [0] => Array ( [value] => 0 ) ) ) [field_more_like_this] => Array ( [und] => Array ( [0] => Array ( [target_id] => 2380 ) [1] => Array ( [target_id] => 6148 ) [2] => Array ( [target_id] => 4612 ) ) ) [metatags] => Array ( [und] => Array ( [og:image] => Array ( [value] => public://top_image/arctic_princess-9271248-lng_tanker-ship-222.jpg ) [article:author] => Array ( ) [article:publisher] => Array ( ) [article:section] => Array ( ) [article:tag] => Array ( ) [article:published_time] => Array ( ) [article:modified_time] => Array ( ) [article:expiration_time] => Array ( ) [profile:first_name] => Array ( ) [profile:last_name] => Array ( ) [profile:username] => Array ( ) [profile:gender] => Array ( ) [book:author] => Array ( ) [book:isbn] => Array ( ) [book:release_date] => Array ( ) [book:tag] => Array ( ) [video:actor] => Array ( ) [video:actor:role] => Array ( ) [video:director] => Array ( ) [video:writer] => Array ( ) [video:duration] => Array ( ) [video:release_date] => Array ( ) [video:tag] => Array ( ) [video:series] => Array ( ) ) ) [rdf_mapping] => Array ( [rdftype] => Array ( [0] => sioc:Item [1] => foaf:Document ) [title] => Array ( [predicates] => Array ( [0] => dc:title ) ) [created] => Array ( [predicates] => Array ( [0] => dc:date [1] => dc:created ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [changed] => Array ( [predicates] => Array ( [0] => dc:modified ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [body] => Array ( [predicates] => Array ( [0] => content:encoded ) ) [uid] => Array ( [predicates] => Array ( [0] => sioc:has_creator ) [type] => rel ) [name] => Array ( [predicates] => Array ( [0] => foaf:name ) ) [comment_count] => Array ( [predicates] => Array ( [0] => sioc:num_replies ) [datatype] => xsd:integer ) [last_activity] => Array ( [predicates] => Array ( [0] => sioc:last_activity_date ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) ) [path] => Array ( [pathauto] => 1 ) [cid] => 0 [last_comment_timestamp] => 1488221733 [last_comment_name] => [last_comment_uid] => 10 [comment_count] => 0 [name] => bill [picture] => 0 [data] => b:0; ) [access] => 1 ) ) ) [field_show_cropped_image] => Array ( [und] => Array ( [0] => Array ( [value] => 1 ) ) ) [metatags] => Array ( [und] => Array ( [og:image] => Array ( [value] => ) [article:author] => Array ( ) [article:publisher] => Array ( ) [article:section] => Array ( ) [article:tag] => Array ( ) [article:published_time] => Array ( ) [article:modified_time] => Array ( ) [article:expiration_time] => Array ( ) [profile:first_name] => Array ( ) [profile:last_name] => Array ( ) [profile:username] => Array ( ) [profile:gender] => Array ( ) [book:author] => Array ( ) [book:isbn] => Array ( ) [book:release_date] => Array ( ) [book:tag] => Array ( ) [video:actor] => Array ( ) [video:actor:role] => Array ( ) [video:director] => Array ( ) [video:writer] => Array ( ) [video:duration] => Array ( ) [video:release_date] => Array ( ) [video:tag] => Array ( ) [video:series] => Array ( ) ) ) [rdf_mapping] => Array ( [rdftype] => Array ( [0] => sioc:Item [1] => foaf:Document ) [title] => Array ( [predicates] => Array ( [0] => dc:title ) ) [created] => Array ( [predicates] => Array ( [0] => dc:date [1] => dc:created ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [changed] => Array ( [predicates] => Array ( [0] => dc:modified ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [body] => Array ( [predicates] => Array ( [0] => content:encoded ) ) [uid] => Array ( [predicates] => Array ( [0] => sioc:has_creator ) [type] => rel ) [name] => Array ( [predicates] => Array ( [0] => foaf:name ) ) [comment_count] => Array ( [predicates] => Array ( [0] => sioc:num_replies ) [datatype] => xsd:integer ) [last_activity] => Array ( [predicates] => Array ( [0] => sioc:last_activity_date ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) ) [path] => Array ( [pathauto] => 1 ) [cid] => 0 [last_comment_timestamp] => 1533067977 [last_comment_name] => [last_comment_uid] => 118 [comment_count] => 0 [name] => mollie [picture] => 0 [data] => b:0; [entity_view_prepared] => 1 ) [#items] => Array ( [0] => Array ( [fid] => 2804 [uid] => 118 [filename] => 1028854607.jpg [uri] => public://1028854607.jpg [filemime] => image/jpeg [filesize] => 94892 [status] => 1 [timestamp] => 1533068142 [focus_rect] => [crop_rect] => [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 1000 [height] => 541 ) ) [#formatter] => image [0] => Array ( [#theme] => image_formatter [#item] => Array ( [fid] => 2804 [uid] => 118 [filename] => 1028854607.jpg [uri] => public://1028854607.jpg [filemime] => image/jpeg [filesize] => 94892 [status] => 1 [timestamp] => 1533068142 [focus_rect] => [crop_rect] => [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 1000 [height] => 541 ) [#image_style] => content_width [#path] => ) ) [field_image_caption] => Array ( [#theme] => field [#weight] => 2 [#title] => Image Caption [#access] => 1 [#label_display] => hidden [#view_mode] => full [#language] => und [#field_name] => field_image_caption [#field_type] => text [#field_translatable] => 0 [#entity_type] => node [#bundle] => wp_blog [#object] => stdClass Object ( [vid] => 8775 [uid] => 118 [title] => A Closer Look at the Trump and Juncker Agreement [log] => [status] => 1 [comment] => 1 [promote] => 0 [sticky] => 0 [nid] => 6636 [type] => wp_blog [language] => und [created] => 1533067977 [changed] => 1533127312 [tnid] => 0 [translate] => 0 [revision_timestamp] => 1533127312 [revision_uid] => 90 [body] => Array ( [und] => Array ( [0] => Array ( [value] =>

Last week, in an effort to prevent a possible trade war over U.S. steel and aluminum tariffs, the President of the European Commission (EC) Jean-Claude Juncker met in Washington with U.S. President Donald Trump. They struck an agreement about Europe buying more U.S. LNG. But as noted by many analysts, neither side can really make this happen.

The agreement includes very few details: Juncker committed Europe to significantly increase their volume of U.S. LNG imports, while Trump agreed to send more. Yet neither person making the promises has much influence on fulfilling them. The LNG that originates from U.S. coasts does not belong to the U.S. government but to profit-seeking private companies. The U.S. government can encourage LNG production—by providing a hospitable regulatory and legal environment—but it cannot force companies to send products to a specific region or country.

On his part, Juncker represents the EU but is ultimately dependent on individual EU member decisions. The EU cannot force its members to import U.S. LNG, but it can motivate or make it possible through investment in and financing of LNG infrastructure.

Going further, analysts are not sure whether additional LNG importing capacity would ultimately attract U.S. LNG. Some point to the existing capacity that is currently underused, a result of inadequate LNG demand and LNG prices that are high in comparison to the piped Russian gas. In addition, there is the question of LNG competition from cheaper and/or more proximate producers such as Norway, Qatar or, most recently, Russia.

Today’s U.S. producers are lured to Asia, where higher prices provide higher profit margins. Thus, even if more terminals are built, it is not a given that these terminals will maximize capacity or draw LNG from the U.S.

In the meantime, Russia has noted record-level highs in natural gas delivery to Europe in 2016 and 2017. And new, more secure transport routes are being built (Nord Stream 2, Turkish Stream) to deliver the abundant and low-cost Russian gas to Europe.

But while Juncker’s promise of large U.S. LNG imports may never materialize, his commitment to building new LNG terminals may actually be an important part of the U.S.-EU natural gas and energy security strategy.

Strategically placed (see Figure 1), new terminals could impact Russian pipeline gas deliveries—if not in volume, then at least in price—while dulling the geopolitical benefits Russia is deriving from its dominant supplier position. My recent research with Gabriel Collins identifies in detail the elements needed to achieve this goal. In a nutshell, the EU must:

  1. Build terminals in areas that are currently highly dependent on Russian gas;
  2. Ramp up underutilized LNG import capacity—with pipelines and interconnectors that take gas into areas that lack gas diversity;
  3. Push harder for market-based rules to govern the natural gas market within EU member states, to encourage competition and spawn interest from U.S. LNG producers.

Figure 1. Priority Zones for Geoeconomic Gas Investments 

Source: Collins & Mikulska, 2018.

Would all this bring a rush of U.S. LNG onto the European shores?

Unlikely. U.S. LNG is expected to continue to flow to Asia, where prices and demand are advantageous for U.S. producers.

But as much or as little of the U.S. LNG that would actually reach Europe would not be inconsequential.

LNG infrastructure in Europe would provide ability for the U.S. LNG to feed into the market whenever price disruptions emerge. As such it would provide a price floor and protection from extraction of economic rents by a dominant supplier.

In addition, the deliveries would neutralize geopolitical influence Russia as such supplier has yielded (also a major win for the U.S.).  In economic terms, activating more LNG capacity and more potential demand, would be beneficial for U.S. LNG producers. Even if their products never reach European shores, European LNG demand it will impact the industry via displacement: non-U.S. LNG delivered to Europe makes space for U.S deliveries elsewhere, including China or India, for example.

[summary] => [format] => full_html [safe_value] =>

Last week, in an effort to prevent a possible trade war over U.S. steel and aluminum tariffs, the President of the European Commission (EC) Jean-Claude Juncker met in Washington with U.S. President Donald Trump. They struck an agreement about Europe buying more U.S. LNG. But as noted by many analysts, neither side can really make this happen.

The agreement includes very few details: Juncker committed Europe to significantly increase their volume of U.S. LNG imports, while Trump agreed to send more. Yet neither person making the promises has much influence on fulfilling them. The LNG that originates from U.S. coasts does not belong to the U.S. government but to profit-seeking private companies. The U.S. government can encourage LNG production—by providing a hospitable regulatory and legal environment—but it cannot force companies to send products to a specific region or country.

On his part, Juncker represents the EU but is ultimately dependent on individual EU member decisions. The EU cannot force its members to import U.S. LNG, but it can motivate or make it possible through investment in and financing of LNG infrastructure.

Going further, analysts are not sure whether additional LNG importing capacity would ultimately attract U.S. LNG. Some point to the existing capacity that is currently underused, a result of inadequate LNG demand and LNG prices that are high in comparison to the piped Russian gas. In addition, there is the question of LNG competition from cheaper and/or more proximate producers such as Norway, Qatar or, most recently, Russia.

Today’s U.S. producers are lured to Asia, where higher prices provide higher profit margins. Thus, even if more terminals are built, it is not a given that these terminals will maximize capacity or draw LNG from the U.S.

In the meantime, Russia has noted record-level highs in natural gas delivery to Europe in 2016 and 2017. And new, more secure transport routes are being built (Nord Stream 2, Turkish Stream) to deliver the abundant and low-cost Russian gas to Europe.

But while Juncker’s promise of large U.S. LNG imports may never materialize, his commitment to building new LNG terminals may actually be an important part of the U.S.-EU natural gas and energy security strategy.

Strategically placed (see Figure 1), new terminals could impact Russian pipeline gas deliveries—if not in volume, then at least in price—while dulling the geopolitical benefits Russia is deriving from its dominant supplier position. My recent research with Gabriel Collins identifies in detail the elements needed to achieve this goal. In a nutshell, the EU must:

  1. Build terminals in areas that are currently highly dependent on Russian gas;
  2. Ramp up underutilized LNG import capacity—with pipelines and interconnectors that take gas into areas that lack gas diversity;
  3. Push harder for market-based rules to govern the natural gas market within EU member states, to encourage competition and spawn interest from U.S. LNG producers.

Figure 1. Priority Zones for Geoeconomic Gas Investments 

Source: Collins & Mikulska, 2018.

Would all this bring a rush of U.S. LNG onto the European shores?

Unlikely. U.S. LNG is expected to continue to flow to Asia, where prices and demand are advantageous for U.S. producers.

But as much or as little of the U.S. LNG that would actually reach Europe would not be inconsequential.

LNG infrastructure in Europe would provide ability for the U.S. LNG to feed into the market whenever price disruptions emerge. As such it would provide a price floor and protection from extraction of economic rents by a dominant supplier.

In addition, the deliveries would neutralize geopolitical influence Russia as such supplier has yielded (also a major win for the U.S.).  In economic terms, activating more LNG capacity and more potential demand, would be beneficial for U.S. LNG producers. Even if their products never reach European shores, European LNG demand it will impact the industry via displacement: non-U.S. LNG delivered to Europe makes space for U.S deliveries elsewhere, including China or India, for example.

[safe_summary] => ) ) ) [taxonomy_wp_blog_tags] => Array ( ) [field_intro_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 2804 [uid] => 118 [filename] => 1028854607.jpg [uri] => public://1028854607.jpg [filemime] => image/jpeg [filesize] => 94892 [status] => 1 [timestamp] => 1533068142 [focus_rect] => [crop_rect] => [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 1000 [height] => 541 ) ) ) [field_blog_author] => Array ( [und] => Array ( [0] => Array ( [value] => Anna Mikulska [format] => [safe_value] => Anna Mikulska ) ) ) [field_image_caption] => Array ( [und] => Array ( [0] => Array ( [value] => Source: Sputnik International [format] => [safe_value] => Source: Sputnik International ) ) ) [field_set_as_featured_] => Array ( [und] => Array ( [0] => Array ( [value] => no ) ) ) [field_authors] => Array ( [und] => Array ( [0] => Array ( [target_id] => 1741 ) ) ) [field_addthis] => Array ( [und] => Array ( [0] => Array ( [value] => Dummy value ) ) ) [field_teaser] => Array ( [und] => Array ( [0] => Array ( [value] =>

The recent LNG agreement may not have teeth, but it might have impact.

[format] => full_html [safe_value] =>

The recent LNG agreement may not have teeth, but it might have impact.

) ) ) [field_primary_theme] => Array ( [und] => Array ( [0] => Array ( [tid] => 203 ) ) ) [field_secondary_themes] => Array ( [und] => Array ( [0] => Array ( [tid] => 204 ) ) ) [field_exclude] => Array ( [und] => Array ( [0] => Array ( [value] => 0 ) ) ) [field_more_like_this] => Array ( [und] => Array ( [0] => Array ( [target_id] => 4612 [entity] => stdClass Object ( [vid] => 8246 [uid] => 118 [title] => Yamal LNG – A Big Win for Russian Gas? [log] => [status] => 1 [comment] => 1 [promote] => 0 [sticky] => 0 [nid] => 4612 [type] => wp_blog [language] => und [created] => 1515604279 [changed] => 1531354760 [tnid] => 0 [translate] => 0 [revision_timestamp] => 1531354760 [revision_uid] => 1 [body] => Array ( [und] => Array ( [0] => Array ( [value] =>

On December 8, a first LNG cargo left Russia’s Yamal Peninsula. The event has been considered a great win not only by Yamal LNG shareholders but also by the Russian government, which sees the project as a first step to Russia’s becoming the world’s top LNG player. Yamal LNG was completed on time despite difficult Arctic conditions and technological and financial difficulties compounded by U.S. sanctions. But, as it often happens, the reality and the effects of Russia’s new endeavor are more nuanced.

To begin, Yamal LNG has not been the first Russian LNG facility. The first one—Sakhalin 2—has been operating since 2009, delivering LNG mainly to the Asia-Pacific region. The project has been managed by state-owned Gazprom, until recently, the only Russian company allowed to export natural gas.

In 2013, the Russian government allowed Russian companies other than Gazprom to export natural gas but only in the form of LNG while keeping Gazprom export monopoly in piped gas. The decision allowed Novatek, a private Russian company, to pursue the Yamal project.

The project was completed on time despite significant headwinds caused by U.S. sanctions, which have blocked technology transfer and made financing of the investment extremely difficult. But at the end, Novatek was able to secure both financing and technology transfer thanks to collaboration with France’s Total, China’s National Petroleum Corportation and China’s Silk Road Fund. But the project could not be successful if not for significant support from the Russian government, which extended a 12-year Mineral Extraction Tax holiday toward the project, subsidized part of construction activity, and exempted LNG from export taxes.

Yamal’s success stands in stark contrast to the failure of LNG projects planned by Russian national companies Gazprom and Rosneft.  As a result, Novatek has grown to Russia’s LNG leader—protected but not owned by the Russian government. This realization should give pause to Gazprom, particularly as it considers its position in Europe.

Similar to Sakhalin 2, Yamal LNG is focused on LNG delivery to Asia. However, due to Arctic conditions it is only able to do so directly during the summer months. Over the remaining part of the year, Yamal LNG will take a longer delivery route via Europe. Such availability of Yamal LNG in Europe over the cold period—when natural gas is particularly in demand—bodes well for the European market and EU’s push toward energy security and diversification of supply.

But this does not bode well for Gazprom’s position in Europe, as its list of competitors will expand from Norway, Qatar, and the U.S. to include also a Russian company. The pressure is even greater when one considers the pushback Gazprom has faced in Europe with respect to the company’s vertical structure and monopolistic practices,

The pushback institutionalized within the EU’s Third Energy Package has been visible on many levels, including: 1) difficulties to acquire a permit for a second set of pipelines (Nord Stream 2) that would bring more Russian gas under the Baltic Sea directly to Germany;  2) active litigation against Gazprom’s monopolistic practices, and 3) new infrastructure projects that involve new pipeline interconnectors and LNG import facilities that diversify European supply, .

All of the above make access to the European market increasingly difficult for Gazprom, but these conditions do help other natural gas suppliers, including Yamal LNG, which needs a winter home for its gas during the time when Artic temperatures limit direct delivery to Asia. As a result, Gazprom and Novatek may end up competing for the same market, which may undermine Gazprom’s market position, and potentially reduce Russia’s geopolitical influence in regions most dependent on Russian gas.

To sum up, Novatek’s Yamal LNG has been an undisputed accomplishment, but it is unclear whether it will have a net positive influence on Russia’s position in natural gas exports. It seems that Novatek’s gain can become Gazprom’s loss—if not Russia’s loss—in Europe and possibly beyond.

[summary] => [format] => full_html [safe_value] =>

On December 8, a first LNG cargo left Russia’s Yamal Peninsula. The event has been considered a great win not only by Yamal LNG shareholders but also by the Russian government, which sees the project as a first step to Russia’s becoming the world’s top LNG player. Yamal LNG was completed on time despite difficult Arctic conditions and technological and financial difficulties compounded by U.S. sanctions. But, as it often happens, the reality and the effects of Russia’s new endeavor are more nuanced.

To begin, Yamal LNG has not been the first Russian LNG facility. The first one—Sakhalin 2—has been operating since 2009, delivering LNG mainly to the Asia-Pacific region. The project has been managed by state-owned Gazprom, until recently, the only Russian company allowed to export natural gas.

In 2013, the Russian government allowed Russian companies other than Gazprom to export natural gas but only in the form of LNG while keeping Gazprom export monopoly in piped gas. The decision allowed Novatek, a private Russian company, to pursue the Yamal project.

The project was completed on time despite significant headwinds caused by U.S. sanctions, which have blocked technology transfer and made financing of the investment extremely difficult. But at the end, Novatek was able to secure both financing and technology transfer thanks to collaboration with France’s Total, China’s National Petroleum Corportation and China’s Silk Road Fund. But the project could not be successful if not for significant support from the Russian government, which extended a 12-year Mineral Extraction Tax holiday toward the project, subsidized part of construction activity, and exempted LNG from export taxes.

Yamal’s success stands in stark contrast to the failure of LNG projects planned by Russian national companies Gazprom and Rosneft.  As a result, Novatek has grown to Russia’s LNG leader—protected but not owned by the Russian government. This realization should give pause to Gazprom, particularly as it considers its position in Europe.

Similar to Sakhalin 2, Yamal LNG is focused on LNG delivery to Asia. However, due to Arctic conditions it is only able to do so directly during the summer months. Over the remaining part of the year, Yamal LNG will take a longer delivery route via Europe. Such availability of Yamal LNG in Europe over the cold period—when natural gas is particularly in demand—bodes well for the European market and EU’s push toward energy security and diversification of supply.

But this does not bode well for Gazprom’s position in Europe, as its list of competitors will expand from Norway, Qatar, and the U.S. to include also a Russian company. The pressure is even greater when one considers the pushback Gazprom has faced in Europe with respect to the company’s vertical structure and monopolistic practices,

The pushback institutionalized within the EU’s Third Energy Package has been visible on many levels, including: 1) difficulties to acquire a permit for a second set of pipelines (Nord Stream 2) that would bring more Russian gas under the Baltic Sea directly to Germany;  2) active litigation against Gazprom’s monopolistic practices, and 3) new infrastructure projects that involve new pipeline interconnectors and LNG import facilities that diversify European supply, .

All of the above make access to the European market increasingly difficult for Gazprom, but these conditions do help other natural gas suppliers, including Yamal LNG, which needs a winter home for its gas during the time when Artic temperatures limit direct delivery to Asia. As a result, Gazprom and Novatek may end up competing for the same market, which may undermine Gazprom’s market position, and potentially reduce Russia’s geopolitical influence in regions most dependent on Russian gas.

To sum up, Novatek’s Yamal LNG has been an undisputed accomplishment, but it is unclear whether it will have a net positive influence on Russia’s position in natural gas exports. It seems that Novatek’s gain can become Gazprom’s loss—if not Russia’s loss—in Europe and possibly beyond.

[safe_summary] => ) ) ) [taxonomy_wp_blog_tags] => Array ( ) [field_intro_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 2390 [uid] => 118 [filename] => 59e71f13fc7e93670a8b4567.jpg [uri] => public://59e71f13fc7e93670a8b4567.jpg [filemime] => image/jpeg [filesize] => 107658 [status] => 1 [timestamp] => 1515604279 [focus_rect] => [crop_rect] => [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 790 [height] => 444 ) ) ) [field_blog_author] => Array ( [und] => Array ( [0] => Array ( [value] => Anna Mikulska [format] => [safe_value] => Anna Mikulska ) ) ) [field_image_caption] => Array ( [und] => Array ( [0] => Array ( [value] => Photo via: RT.com [format] => [safe_value] => Photo via: RT.com ) ) ) [field_set_as_featured_] => Array ( [und] => Array ( [0] => Array ( [value] => no ) ) ) [field_authors] => Array ( [und] => Array ( [0] => Array ( [target_id] => 1741 ) ) ) [field_addthis] => Array ( [und] => Array ( [0] => Array ( [value] => Dummy value ) ) ) [field_teaser] => Array ( ) [field_primary_theme] => Array ( ) [field_secondary_themes] => Array ( ) [field_exclude] => Array ( ) [field_more_like_this] => Array ( ) [field_show_cropped_image] => Array ( [und] => Array ( [0] => Array ( [value] => 1 ) ) ) [metatags] => Array ( [und] => Array ( [article:published_time] => Array ( ) [article:modified_time] => Array ( ) ) ) [rdf_mapping] => Array ( [rdftype] => Array ( [0] => sioc:Item [1] => foaf:Document ) [title] => Array ( [predicates] => Array ( [0] => dc:title ) ) [created] => Array ( [predicates] => Array ( [0] => dc:date [1] => dc:created ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [changed] => Array ( [predicates] => Array ( [0] => dc:modified ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [body] => Array ( [predicates] => Array ( [0] => content:encoded ) ) [uid] => Array ( [predicates] => Array ( [0] => sioc:has_creator ) [type] => rel ) [name] => Array ( [predicates] => Array ( [0] => foaf:name ) ) [comment_count] => Array ( [predicates] => Array ( [0] => sioc:num_replies ) [datatype] => xsd:integer ) [last_activity] => Array ( [predicates] => Array ( [0] => sioc:last_activity_date ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) ) [path] => Array ( [pathauto] => 1 ) [cid] => 0 [last_comment_timestamp] => 1515604279 [last_comment_name] => [last_comment_uid] => 118 [comment_count] => 0 [name] => mollie [picture] => 0 [data] => b:0; ) [access] => 1 ) [1] => Array ( [target_id] => 3231 [entity] => stdClass Object ( [vid] => 4205 [uid] => 10 [title] => How U.S. LNG is Changing the Global Gas Market [log] => [status] => 1 [comment] => 1 [promote] => 0 [sticky] => 0 [nid] => 3231 [type] => podcast [language] => und [created] => 1488258000 [changed] => 1530890595 [tnid] => 0 [translate] => 0 [revision_timestamp] => 1530890595 [revision_uid] => 10 [body] => Array ( [und] => Array ( [0] => Array ( [value] =>

In 2016 the first shipment of U.S. liquefied natural gas left by tanker from a terminal on the Gulf coast.  In the year since, U.S. LNG has made its way to customers around the globe, increasing competition in the gas market and threatening to loosen the grip of some suppliers on captive markets.

Guest Anna Mikulska, Senior Fellow at the Kleinman Center for Energy Policy, talks about the globalization of the natural gas market, the competitiveness of U.S. exports and their implications for relationships abroad.

 

[summary] => [format] => full_html [safe_value] =>

In 2016 the first shipment of U.S. liquefied natural gas left by tanker from a terminal on the Gulf coast.  In the year since, U.S. LNG has made its way to customers around the globe, increasing competition in the gas market and threatening to loosen the grip of some suppliers on captive markets.

Guest Anna Mikulska, Senior Fellow at the Kleinman Center for Energy Policy, talks about the globalization of the natural gas market, the competitiveness of U.S. exports and their implications for relationships abroad.

 

[safe_summary] => ) ) ) [field_date] => Array ( [und] => Array ( [0] => Array ( [value] => 2017-02-28 00:00:00 [timezone] => America/New_York [timezone_db] => America/New_York [date_type] => datetime ) ) ) [field_episode] => Array ( [und] => Array ( [0] => Array ( [value] => EPN07 [format] => [safe_value] => EPN07 ) ) ) [field_episode_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 1673 [uid] => 10 [filename] => EPN 07 Square.jpg [uri] => public://epn_image/EPN 07 Square.jpg [filemime] => image/jpeg [filesize] => 162022 [status] => 1 [timestamp] => 1488221733 [focus_rect] => [crop_rect] => [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 500 [height] => 500 ) ) ) [field_player] => Array ( [und] => Array ( [0] => Array ( [value] => [format] => no_editor [safe_value] => ) ) ) [field_teaser] => Array ( [und] => Array ( [0] => Array ( [value] =>

U.S. natural gas exports are helping to globalize the gas market, putting traditional buyer-seller relationships to the test and raising the possibility of far-reaching geopolitical consequences.

[format] => full_html [safe_value] =>

U.S. natural gas exports are helping to globalize the gas market, putting traditional buyer-seller relationships to the test and raising the possibility of far-reaching geopolitical consequences.

) ) ) [field_top_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 1675 [uid] => 10 [filename] => arctic_princess-9271248-lng_tanker-ship-222.jpg [uri] => public://top_image/arctic_princess-9271248-lng_tanker-ship-222.jpg [filemime] => image/jpeg [filesize] => 1571110 [status] => 1 [timestamp] => 1488221733 [focus_rect] => 0,123,1800,642 [crop_rect] => 0,123,1800,642 [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 1800 [height] => 1350 ) ) ) [field_embed_small] => Array ( [und] => Array ( [0] => Array ( [value] => [format] => no_editor [safe_value] => ) ) ) [field_teaser_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 1674 [uid] => 10 [filename] => arctic_princess-9271248-lng_tanker-ship-222.jpg [uri] => public://arctic_princess-9271248-lng_tanker-ship-222.jpg [filemime] => image/jpeg [filesize] => 356661 [status] => 1 [timestamp] => 1488221733 [focus_rect] => 190,0,429,428 [crop_rect] => 190,0,429,428 [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 800 [height] => 600 ) ) ) [field_set_as_featured_] => Array ( ) [field_authors] => Array ( [und] => Array ( [0] => Array ( [target_id] => 1741 ) ) ) [field_addthis] => Array ( [und] => Array ( [0] => Array ( [value] => Dummy value ) ) ) [field_primary_theme] => Array ( [und] => Array ( [0] => Array ( [tid] => 203 ) ) ) [field_secondary_themes] => Array ( [und] => Array ( [0] => Array ( [tid] => 204 ) ) ) [field_exclude] => Array ( [und] => Array ( [0] => Array ( [value] => 0 ) ) ) [field_more_like_this] => Array ( [und] => Array ( [0] => Array ( [target_id] => 2380 ) [1] => Array ( [target_id] => 6148 ) [2] => Array ( [target_id] => 4612 ) ) ) [metatags] => Array ( [und] => Array ( [og:image] => Array ( [value] => public://top_image/arctic_princess-9271248-lng_tanker-ship-222.jpg ) [article:author] => Array ( ) [article:publisher] => Array ( ) [article:section] => Array ( ) [article:tag] => Array ( ) [article:published_time] => Array ( ) [article:modified_time] => Array ( ) [article:expiration_time] => Array ( ) [profile:first_name] => Array ( ) [profile:last_name] => Array ( ) [profile:username] => Array ( ) [profile:gender] => Array ( ) [book:author] => Array ( ) [book:isbn] => Array ( ) [book:release_date] => Array ( ) [book:tag] => Array ( ) [video:actor] => Array ( ) [video:actor:role] => Array ( ) [video:director] => Array ( ) [video:writer] => Array ( ) [video:duration] => Array ( ) [video:release_date] => Array ( ) [video:tag] => Array ( ) [video:series] => Array ( ) ) ) [rdf_mapping] => Array ( [rdftype] => Array ( [0] => sioc:Item [1] => foaf:Document ) [title] => Array ( [predicates] => Array ( [0] => dc:title ) ) [created] => Array ( [predicates] => Array ( [0] => dc:date [1] => dc:created ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [changed] => Array ( [predicates] => Array ( [0] => dc:modified ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [body] => Array ( [predicates] => Array ( [0] => content:encoded ) ) [uid] => Array ( [predicates] => Array ( [0] => sioc:has_creator ) [type] => rel ) [name] => Array ( [predicates] => Array ( [0] => foaf:name ) ) [comment_count] => Array ( [predicates] => Array ( [0] => sioc:num_replies ) [datatype] => xsd:integer ) [last_activity] => Array ( [predicates] => Array ( [0] => sioc:last_activity_date ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) ) [path] => Array ( [pathauto] => 1 ) [cid] => 0 [last_comment_timestamp] => 1488221733 [last_comment_name] => [last_comment_uid] => 10 [comment_count] => 0 [name] => bill [picture] => 0 [data] => b:0; ) [access] => 1 ) ) ) [field_show_cropped_image] => Array ( [und] => Array ( [0] => Array ( [value] => 1 ) ) ) [metatags] => Array ( [und] => Array ( [og:image] => Array ( [value] => ) [article:author] => Array ( ) [article:publisher] => Array ( ) [article:section] => Array ( ) [article:tag] => Array ( ) [article:published_time] => Array ( ) [article:modified_time] => Array ( ) [article:expiration_time] => Array ( ) [profile:first_name] => Array ( ) [profile:last_name] => Array ( ) [profile:username] => Array ( ) [profile:gender] => Array ( ) [book:author] => Array ( ) [book:isbn] => Array ( ) [book:release_date] => Array ( ) [book:tag] => Array ( ) [video:actor] => Array ( ) [video:actor:role] => Array ( ) [video:director] => Array ( ) [video:writer] => Array ( ) [video:duration] => Array ( ) [video:release_date] => Array ( ) [video:tag] => Array ( ) [video:series] => Array ( ) ) ) [rdf_mapping] => Array ( [rdftype] => Array ( [0] => sioc:Item [1] => foaf:Document ) [title] => Array ( [predicates] => Array ( [0] => dc:title ) ) [created] => Array ( [predicates] => Array ( [0] => dc:date [1] => dc:created ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [changed] => Array ( [predicates] => Array ( [0] => dc:modified ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [body] => Array ( [predicates] => Array ( [0] => content:encoded ) ) [uid] => Array ( [predicates] => Array ( [0] => sioc:has_creator ) [type] => rel ) [name] => Array ( [predicates] => Array ( [0] => foaf:name ) ) [comment_count] => Array ( [predicates] => Array ( [0] => sioc:num_replies ) [datatype] => xsd:integer ) [last_activity] => Array ( [predicates] => Array ( [0] => sioc:last_activity_date ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) ) [path] => Array ( [pathauto] => 1 ) [cid] => 0 [last_comment_timestamp] => 1533067977 [last_comment_name] => [last_comment_uid] => 118 [comment_count] => 0 [name] => mollie [picture] => 0 [data] => b:0; [entity_view_prepared] => 1 ) [#items] => Array ( [0] => Array ( [value] => Source: Sputnik International [format] => [safe_value] => Source: Sputnik International ) ) [#formatter] => text_default [0] => Array ( [#markup] => Source: Sputnik International ) ) [body] => Array ( [#theme] => field [#weight] => 3 [#title] => Body [#access] => 1 [#label_display] => hidden [#view_mode] => full [#language] => und [#field_name] => body [#field_type] => text_with_summary [#field_translatable] => 0 [#entity_type] => node [#bundle] => wp_blog [#object] => stdClass Object ( [vid] => 8775 [uid] => 118 [title] => A Closer Look at the Trump and Juncker Agreement [log] => [status] => 1 [comment] => 1 [promote] => 0 [sticky] => 0 [nid] => 6636 [type] => wp_blog [language] => und [created] => 1533067977 [changed] => 1533127312 [tnid] => 0 [translate] => 0 [revision_timestamp] => 1533127312 [revision_uid] => 90 [body] => Array ( [und] => Array ( [0] => Array ( [value] =>

Last week, in an effort to prevent a possible trade war over U.S. steel and aluminum tariffs, the President of the European Commission (EC) Jean-Claude Juncker met in Washington with U.S. President Donald Trump. They struck an agreement about Europe buying more U.S. LNG. But as noted by many analysts, neither side can really make this happen.

The agreement includes very few details: Juncker committed Europe to significantly increase their volume of U.S. LNG imports, while Trump agreed to send more. Yet neither person making the promises has much influence on fulfilling them. The LNG that originates from U.S. coasts does not belong to the U.S. government but to profit-seeking private companies. The U.S. government can encourage LNG production—by providing a hospitable regulatory and legal environment—but it cannot force companies to send products to a specific region or country.

On his part, Juncker represents the EU but is ultimately dependent on individual EU member decisions. The EU cannot force its members to import U.S. LNG, but it can motivate or make it possible through investment in and financing of LNG infrastructure.

Going further, analysts are not sure whether additional LNG importing capacity would ultimately attract U.S. LNG. Some point to the existing capacity that is currently underused, a result of inadequate LNG demand and LNG prices that are high in comparison to the piped Russian gas. In addition, there is the question of LNG competition from cheaper and/or more proximate producers such as Norway, Qatar or, most recently, Russia.

Today’s U.S. producers are lured to Asia, where higher prices provide higher profit margins. Thus, even if more terminals are built, it is not a given that these terminals will maximize capacity or draw LNG from the U.S.

In the meantime, Russia has noted record-level highs in natural gas delivery to Europe in 2016 and 2017. And new, more secure transport routes are being built (Nord Stream 2, Turkish Stream) to deliver the abundant and low-cost Russian gas to Europe.

But while Juncker’s promise of large U.S. LNG imports may never materialize, his commitment to building new LNG terminals may actually be an important part of the U.S.-EU natural gas and energy security strategy.

Strategically placed (see Figure 1), new terminals could impact Russian pipeline gas deliveries—if not in volume, then at least in price—while dulling the geopolitical benefits Russia is deriving from its dominant supplier position. My recent research with Gabriel Collins identifies in detail the elements needed to achieve this goal. In a nutshell, the EU must:

  1. Build terminals in areas that are currently highly dependent on Russian gas;
  2. Ramp up underutilized LNG import capacity—with pipelines and interconnectors that take gas into areas that lack gas diversity;
  3. Push harder for market-based rules to govern the natural gas market within EU member states, to encourage competition and spawn interest from U.S. LNG producers.

Figure 1. Priority Zones for Geoeconomic Gas Investments 

Source: Collins & Mikulska, 2018.

Would all this bring a rush of U.S. LNG onto the European shores?

Unlikely. U.S. LNG is expected to continue to flow to Asia, where prices and demand are advantageous for U.S. producers.

But as much or as little of the U.S. LNG that would actually reach Europe would not be inconsequential.

LNG infrastructure in Europe would provide ability for the U.S. LNG to feed into the market whenever price disruptions emerge. As such it would provide a price floor and protection from extraction of economic rents by a dominant supplier.

In addition, the deliveries would neutralize geopolitical influence Russia as such supplier has yielded (also a major win for the U.S.).  In economic terms, activating more LNG capacity and more potential demand, would be beneficial for U.S. LNG producers. Even if their products never reach European shores, European LNG demand it will impact the industry via displacement: non-U.S. LNG delivered to Europe makes space for U.S deliveries elsewhere, including China or India, for example.

[summary] => [format] => full_html [safe_value] =>

Last week, in an effort to prevent a possible trade war over U.S. steel and aluminum tariffs, the President of the European Commission (EC) Jean-Claude Juncker met in Washington with U.S. President Donald Trump. They struck an agreement about Europe buying more U.S. LNG. But as noted by many analysts, neither side can really make this happen.

The agreement includes very few details: Juncker committed Europe to significantly increase their volume of U.S. LNG imports, while Trump agreed to send more. Yet neither person making the promises has much influence on fulfilling them. The LNG that originates from U.S. coasts does not belong to the U.S. government but to profit-seeking private companies. The U.S. government can encourage LNG production—by providing a hospitable regulatory and legal environment—but it cannot force companies to send products to a specific region or country.

On his part, Juncker represents the EU but is ultimately dependent on individual EU member decisions. The EU cannot force its members to import U.S. LNG, but it can motivate or make it possible through investment in and financing of LNG infrastructure.

Going further, analysts are not sure whether additional LNG importing capacity would ultimately attract U.S. LNG. Some point to the existing capacity that is currently underused, a result of inadequate LNG demand and LNG prices that are high in comparison to the piped Russian gas. In addition, there is the question of LNG competition from cheaper and/or more proximate producers such as Norway, Qatar or, most recently, Russia.

Today’s U.S. producers are lured to Asia, where higher prices provide higher profit margins. Thus, even if more terminals are built, it is not a given that these terminals will maximize capacity or draw LNG from the U.S.

In the meantime, Russia has noted record-level highs in natural gas delivery to Europe in 2016 and 2017. And new, more secure transport routes are being built (Nord Stream 2, Turkish Stream) to deliver the abundant and low-cost Russian gas to Europe.

But while Juncker’s promise of large U.S. LNG imports may never materialize, his commitment to building new LNG terminals may actually be an important part of the U.S.-EU natural gas and energy security strategy.

Strategically placed (see Figure 1), new terminals could impact Russian pipeline gas deliveries—if not in volume, then at least in price—while dulling the geopolitical benefits Russia is deriving from its dominant supplier position. My recent research with Gabriel Collins identifies in detail the elements needed to achieve this goal. In a nutshell, the EU must:

  1. Build terminals in areas that are currently highly dependent on Russian gas;
  2. Ramp up underutilized LNG import capacity—with pipelines and interconnectors that take gas into areas that lack gas diversity;
  3. Push harder for market-based rules to govern the natural gas market within EU member states, to encourage competition and spawn interest from U.S. LNG producers.

Figure 1. Priority Zones for Geoeconomic Gas Investments 

Source: Collins & Mikulska, 2018.

Would all this bring a rush of U.S. LNG onto the European shores?

Unlikely. U.S. LNG is expected to continue to flow to Asia, where prices and demand are advantageous for U.S. producers.

But as much or as little of the U.S. LNG that would actually reach Europe would not be inconsequential.

LNG infrastructure in Europe would provide ability for the U.S. LNG to feed into the market whenever price disruptions emerge. As such it would provide a price floor and protection from extraction of economic rents by a dominant supplier.

In addition, the deliveries would neutralize geopolitical influence Russia as such supplier has yielded (also a major win for the U.S.).  In economic terms, activating more LNG capacity and more potential demand, would be beneficial for U.S. LNG producers. Even if their products never reach European shores, European LNG demand it will impact the industry via displacement: non-U.S. LNG delivered to Europe makes space for U.S deliveries elsewhere, including China or India, for example.

[safe_summary] => ) ) ) [taxonomy_wp_blog_tags] => Array ( ) [field_intro_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 2804 [uid] => 118 [filename] => 1028854607.jpg [uri] => public://1028854607.jpg [filemime] => image/jpeg [filesize] => 94892 [status] => 1 [timestamp] => 1533068142 [focus_rect] => [crop_rect] => [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 1000 [height] => 541 ) ) ) [field_blog_author] => Array ( [und] => Array ( [0] => Array ( [value] => Anna Mikulska [format] => [safe_value] => Anna Mikulska ) ) ) [field_image_caption] => Array ( [und] => Array ( [0] => Array ( [value] => Source: Sputnik International [format] => [safe_value] => Source: Sputnik International ) ) ) [field_set_as_featured_] => Array ( [und] => Array ( [0] => Array ( [value] => no ) ) ) [field_authors] => Array ( [und] => Array ( [0] => Array ( [target_id] => 1741 ) ) ) [field_addthis] => Array ( [und] => Array ( [0] => Array ( [value] => Dummy value ) ) ) [field_teaser] => Array ( [und] => Array ( [0] => Array ( [value] =>

The recent LNG agreement may not have teeth, but it might have impact.

[format] => full_html [safe_value] =>

The recent LNG agreement may not have teeth, but it might have impact.

) ) ) [field_primary_theme] => Array ( [und] => Array ( [0] => Array ( [tid] => 203 ) ) ) [field_secondary_themes] => Array ( [und] => Array ( [0] => Array ( [tid] => 204 ) ) ) [field_exclude] => Array ( [und] => Array ( [0] => Array ( [value] => 0 ) ) ) [field_more_like_this] => Array ( [und] => Array ( [0] => Array ( [target_id] => 4612 [entity] => stdClass Object ( [vid] => 8246 [uid] => 118 [title] => Yamal LNG – A Big Win for Russian Gas? [log] => [status] => 1 [comment] => 1 [promote] => 0 [sticky] => 0 [nid] => 4612 [type] => wp_blog [language] => und [created] => 1515604279 [changed] => 1531354760 [tnid] => 0 [translate] => 0 [revision_timestamp] => 1531354760 [revision_uid] => 1 [body] => Array ( [und] => Array ( [0] => Array ( [value] =>

On December 8, a first LNG cargo left Russia’s Yamal Peninsula. The event has been considered a great win not only by Yamal LNG shareholders but also by the Russian government, which sees the project as a first step to Russia’s becoming the world’s top LNG player. Yamal LNG was completed on time despite difficult Arctic conditions and technological and financial difficulties compounded by U.S. sanctions. But, as it often happens, the reality and the effects of Russia’s new endeavor are more nuanced.

To begin, Yamal LNG has not been the first Russian LNG facility. The first one—Sakhalin 2—has been operating since 2009, delivering LNG mainly to the Asia-Pacific region. The project has been managed by state-owned Gazprom, until recently, the only Russian company allowed to export natural gas.

In 2013, the Russian government allowed Russian companies other than Gazprom to export natural gas but only in the form of LNG while keeping Gazprom export monopoly in piped gas. The decision allowed Novatek, a private Russian company, to pursue the Yamal project.

The project was completed on time despite significant headwinds caused by U.S. sanctions, which have blocked technology transfer and made financing of the investment extremely difficult. But at the end, Novatek was able to secure both financing and technology transfer thanks to collaboration with France’s Total, China’s National Petroleum Corportation and China’s Silk Road Fund. But the project could not be successful if not for significant support from the Russian government, which extended a 12-year Mineral Extraction Tax holiday toward the project, subsidized part of construction activity, and exempted LNG from export taxes.

Yamal’s success stands in stark contrast to the failure of LNG projects planned by Russian national companies Gazprom and Rosneft.  As a result, Novatek has grown to Russia’s LNG leader—protected but not owned by the Russian government. This realization should give pause to Gazprom, particularly as it considers its position in Europe.

Similar to Sakhalin 2, Yamal LNG is focused on LNG delivery to Asia. However, due to Arctic conditions it is only able to do so directly during the summer months. Over the remaining part of the year, Yamal LNG will take a longer delivery route via Europe. Such availability of Yamal LNG in Europe over the cold period—when natural gas is particularly in demand—bodes well for the European market and EU’s push toward energy security and diversification of supply.

But this does not bode well for Gazprom’s position in Europe, as its list of competitors will expand from Norway, Qatar, and the U.S. to include also a Russian company. The pressure is even greater when one considers the pushback Gazprom has faced in Europe with respect to the company’s vertical structure and monopolistic practices,

The pushback institutionalized within the EU’s Third Energy Package has been visible on many levels, including: 1) difficulties to acquire a permit for a second set of pipelines (Nord Stream 2) that would bring more Russian gas under the Baltic Sea directly to Germany;  2) active litigation against Gazprom’s monopolistic practices, and 3) new infrastructure projects that involve new pipeline interconnectors and LNG import facilities that diversify European supply, .

All of the above make access to the European market increasingly difficult for Gazprom, but these conditions do help other natural gas suppliers, including Yamal LNG, which needs a winter home for its gas during the time when Artic temperatures limit direct delivery to Asia. As a result, Gazprom and Novatek may end up competing for the same market, which may undermine Gazprom’s market position, and potentially reduce Russia’s geopolitical influence in regions most dependent on Russian gas.

To sum up, Novatek’s Yamal LNG has been an undisputed accomplishment, but it is unclear whether it will have a net positive influence on Russia’s position in natural gas exports. It seems that Novatek’s gain can become Gazprom’s loss—if not Russia’s loss—in Europe and possibly beyond.

[summary] => [format] => full_html [safe_value] =>

On December 8, a first LNG cargo left Russia’s Yamal Peninsula. The event has been considered a great win not only by Yamal LNG shareholders but also by the Russian government, which sees the project as a first step to Russia’s becoming the world’s top LNG player. Yamal LNG was completed on time despite difficult Arctic conditions and technological and financial difficulties compounded by U.S. sanctions. But, as it often happens, the reality and the effects of Russia’s new endeavor are more nuanced.

To begin, Yamal LNG has not been the first Russian LNG facility. The first one—Sakhalin 2—has been operating since 2009, delivering LNG mainly to the Asia-Pacific region. The project has been managed by state-owned Gazprom, until recently, the only Russian company allowed to export natural gas.

In 2013, the Russian government allowed Russian companies other than Gazprom to export natural gas but only in the form of LNG while keeping Gazprom export monopoly in piped gas. The decision allowed Novatek, a private Russian company, to pursue the Yamal project.

The project was completed on time despite significant headwinds caused by U.S. sanctions, which have blocked technology transfer and made financing of the investment extremely difficult. But at the end, Novatek was able to secure both financing and technology transfer thanks to collaboration with France’s Total, China’s National Petroleum Corportation and China’s Silk Road Fund. But the project could not be successful if not for significant support from the Russian government, which extended a 12-year Mineral Extraction Tax holiday toward the project, subsidized part of construction activity, and exempted LNG from export taxes.

Yamal’s success stands in stark contrast to the failure of LNG projects planned by Russian national companies Gazprom and Rosneft.  As a result, Novatek has grown to Russia’s LNG leader—protected but not owned by the Russian government. This realization should give pause to Gazprom, particularly as it considers its position in Europe.

Similar to Sakhalin 2, Yamal LNG is focused on LNG delivery to Asia. However, due to Arctic conditions it is only able to do so directly during the summer months. Over the remaining part of the year, Yamal LNG will take a longer delivery route via Europe. Such availability of Yamal LNG in Europe over the cold period—when natural gas is particularly in demand—bodes well for the European market and EU’s push toward energy security and diversification of supply.

But this does not bode well for Gazprom’s position in Europe, as its list of competitors will expand from Norway, Qatar, and the U.S. to include also a Russian company. The pressure is even greater when one considers the pushback Gazprom has faced in Europe with respect to the company’s vertical structure and monopolistic practices,

The pushback institutionalized within the EU’s Third Energy Package has been visible on many levels, including: 1) difficulties to acquire a permit for a second set of pipelines (Nord Stream 2) that would bring more Russian gas under the Baltic Sea directly to Germany;  2) active litigation against Gazprom’s monopolistic practices, and 3) new infrastructure projects that involve new pipeline interconnectors and LNG import facilities that diversify European supply, .

All of the above make access to the European market increasingly difficult for Gazprom, but these conditions do help other natural gas suppliers, including Yamal LNG, which needs a winter home for its gas during the time when Artic temperatures limit direct delivery to Asia. As a result, Gazprom and Novatek may end up competing for the same market, which may undermine Gazprom’s market position, and potentially reduce Russia’s geopolitical influence in regions most dependent on Russian gas.

To sum up, Novatek’s Yamal LNG has been an undisputed accomplishment, but it is unclear whether it will have a net positive influence on Russia’s position in natural gas exports. It seems that Novatek’s gain can become Gazprom’s loss—if not Russia’s loss—in Europe and possibly beyond.

[safe_summary] => ) ) ) [taxonomy_wp_blog_tags] => Array ( ) [field_intro_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 2390 [uid] => 118 [filename] => 59e71f13fc7e93670a8b4567.jpg [uri] => public://59e71f13fc7e93670a8b4567.jpg [filemime] => image/jpeg [filesize] => 107658 [status] => 1 [timestamp] => 1515604279 [focus_rect] => [crop_rect] => [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 790 [height] => 444 ) ) ) [field_blog_author] => Array ( [und] => Array ( [0] => Array ( [value] => Anna Mikulska [format] => [safe_value] => Anna Mikulska ) ) ) [field_image_caption] => Array ( [und] => Array ( [0] => Array ( [value] => Photo via: RT.com [format] => [safe_value] => Photo via: RT.com ) ) ) [field_set_as_featured_] => Array ( [und] => Array ( [0] => Array ( [value] => no ) ) ) [field_authors] => Array ( [und] => Array ( [0] => Array ( [target_id] => 1741 ) ) ) [field_addthis] => Array ( [und] => Array ( [0] => Array ( [value] => Dummy value ) ) ) [field_teaser] => Array ( ) [field_primary_theme] => Array ( ) [field_secondary_themes] => Array ( ) [field_exclude] => Array ( ) [field_more_like_this] => Array ( ) [field_show_cropped_image] => Array ( [und] => Array ( [0] => Array ( [value] => 1 ) ) ) [metatags] => Array ( [und] => Array ( [article:published_time] => Array ( ) [article:modified_time] => Array ( ) ) ) [rdf_mapping] => Array ( [rdftype] => Array ( [0] => sioc:Item [1] => foaf:Document ) [title] => Array ( [predicates] => Array ( [0] => dc:title ) ) [created] => Array ( [predicates] => Array ( [0] => dc:date [1] => dc:created ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [changed] => Array ( [predicates] => Array ( [0] => dc:modified ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [body] => Array ( [predicates] => Array ( [0] => content:encoded ) ) [uid] => Array ( [predicates] => Array ( [0] => sioc:has_creator ) [type] => rel ) [name] => Array ( [predicates] => Array ( [0] => foaf:name ) ) [comment_count] => Array ( [predicates] => Array ( [0] => sioc:num_replies ) [datatype] => xsd:integer ) [last_activity] => Array ( [predicates] => Array ( [0] => sioc:last_activity_date ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) ) [path] => Array ( [pathauto] => 1 ) [cid] => 0 [last_comment_timestamp] => 1515604279 [last_comment_name] => [last_comment_uid] => 118 [comment_count] => 0 [name] => mollie [picture] => 0 [data] => b:0; ) [access] => 1 ) [1] => Array ( [target_id] => 3231 [entity] => stdClass Object ( [vid] => 4205 [uid] => 10 [title] => How U.S. LNG is Changing the Global Gas Market [log] => [status] => 1 [comment] => 1 [promote] => 0 [sticky] => 0 [nid] => 3231 [type] => podcast [language] => und [created] => 1488258000 [changed] => 1530890595 [tnid] => 0 [translate] => 0 [revision_timestamp] => 1530890595 [revision_uid] => 10 [body] => Array ( [und] => Array ( [0] => Array ( [value] =>

In 2016 the first shipment of U.S. liquefied natural gas left by tanker from a terminal on the Gulf coast.  In the year since, U.S. LNG has made its way to customers around the globe, increasing competition in the gas market and threatening to loosen the grip of some suppliers on captive markets.

Guest Anna Mikulska, Senior Fellow at the Kleinman Center for Energy Policy, talks about the globalization of the natural gas market, the competitiveness of U.S. exports and their implications for relationships abroad.

 

[summary] => [format] => full_html [safe_value] =>

In 2016 the first shipment of U.S. liquefied natural gas left by tanker from a terminal on the Gulf coast.  In the year since, U.S. LNG has made its way to customers around the globe, increasing competition in the gas market and threatening to loosen the grip of some suppliers on captive markets.

Guest Anna Mikulska, Senior Fellow at the Kleinman Center for Energy Policy, talks about the globalization of the natural gas market, the competitiveness of U.S. exports and their implications for relationships abroad.

 

[safe_summary] => ) ) ) [field_date] => Array ( [und] => Array ( [0] => Array ( [value] => 2017-02-28 00:00:00 [timezone] => America/New_York [timezone_db] => America/New_York [date_type] => datetime ) ) ) [field_episode] => Array ( [und] => Array ( [0] => Array ( [value] => EPN07 [format] => [safe_value] => EPN07 ) ) ) [field_episode_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 1673 [uid] => 10 [filename] => EPN 07 Square.jpg [uri] => public://epn_image/EPN 07 Square.jpg [filemime] => image/jpeg [filesize] => 162022 [status] => 1 [timestamp] => 1488221733 [focus_rect] => [crop_rect] => [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 500 [height] => 500 ) ) ) [field_player] => Array ( [und] => Array ( [0] => Array ( [value] => [format] => no_editor [safe_value] => ) ) ) [field_teaser] => Array ( [und] => Array ( [0] => Array ( [value] =>

U.S. natural gas exports are helping to globalize the gas market, putting traditional buyer-seller relationships to the test and raising the possibility of far-reaching geopolitical consequences.

[format] => full_html [safe_value] =>

U.S. natural gas exports are helping to globalize the gas market, putting traditional buyer-seller relationships to the test and raising the possibility of far-reaching geopolitical consequences.

) ) ) [field_top_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 1675 [uid] => 10 [filename] => arctic_princess-9271248-lng_tanker-ship-222.jpg [uri] => public://top_image/arctic_princess-9271248-lng_tanker-ship-222.jpg [filemime] => image/jpeg [filesize] => 1571110 [status] => 1 [timestamp] => 1488221733 [focus_rect] => 0,123,1800,642 [crop_rect] => 0,123,1800,642 [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 1800 [height] => 1350 ) ) ) [field_embed_small] => Array ( [und] => Array ( [0] => Array ( [value] => [format] => no_editor [safe_value] => ) ) ) [field_teaser_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 1674 [uid] => 10 [filename] => arctic_princess-9271248-lng_tanker-ship-222.jpg [uri] => public://arctic_princess-9271248-lng_tanker-ship-222.jpg [filemime] => image/jpeg [filesize] => 356661 [status] => 1 [timestamp] => 1488221733 [focus_rect] => 190,0,429,428 [crop_rect] => 190,0,429,428 [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 800 [height] => 600 ) ) ) [field_set_as_featured_] => Array ( ) [field_authors] => Array ( [und] => Array ( [0] => Array ( [target_id] => 1741 ) ) ) [field_addthis] => Array ( [und] => Array ( [0] => Array ( [value] => Dummy value ) ) ) [field_primary_theme] => Array ( [und] => Array ( [0] => Array ( [tid] => 203 ) ) ) [field_secondary_themes] => Array ( [und] => Array ( [0] => Array ( [tid] => 204 ) ) ) [field_exclude] => Array ( [und] => Array ( [0] => Array ( [value] => 0 ) ) ) [field_more_like_this] => Array ( [und] => Array ( [0] => Array ( [target_id] => 2380 ) [1] => Array ( [target_id] => 6148 ) [2] => Array ( [target_id] => 4612 ) ) ) [metatags] => Array ( [und] => Array ( [og:image] => Array ( [value] => public://top_image/arctic_princess-9271248-lng_tanker-ship-222.jpg ) [article:author] => Array ( ) [article:publisher] => Array ( ) [article:section] => Array ( ) [article:tag] => Array ( ) [article:published_time] => Array ( ) [article:modified_time] => Array ( ) [article:expiration_time] => Array ( ) [profile:first_name] => Array ( ) [profile:last_name] => Array ( ) [profile:username] => Array ( ) [profile:gender] => Array ( ) [book:author] => Array ( ) [book:isbn] => Array ( ) [book:release_date] => Array ( ) [book:tag] => Array ( ) [video:actor] => Array ( ) [video:actor:role] => Array ( ) [video:director] => Array ( ) [video:writer] => Array ( ) [video:duration] => Array ( ) [video:release_date] => Array ( ) [video:tag] => Array ( ) [video:series] => Array ( ) ) ) [rdf_mapping] => Array ( [rdftype] => Array ( [0] => sioc:Item [1] => foaf:Document ) [title] => Array ( [predicates] => Array ( [0] => dc:title ) ) [created] => Array ( [predicates] => Array ( [0] => dc:date [1] => dc:created ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [changed] => Array ( [predicates] => Array ( [0] => dc:modified ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [body] => Array ( [predicates] => Array ( [0] => content:encoded ) ) [uid] => Array ( [predicates] => Array ( [0] => sioc:has_creator ) [type] => rel ) [name] => Array ( [predicates] => Array ( [0] => foaf:name ) ) [comment_count] => Array ( [predicates] => Array ( [0] => sioc:num_replies ) [datatype] => xsd:integer ) [last_activity] => Array ( [predicates] => Array ( [0] => sioc:last_activity_date ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) ) [path] => Array ( [pathauto] => 1 ) [cid] => 0 [last_comment_timestamp] => 1488221733 [last_comment_name] => [last_comment_uid] => 10 [comment_count] => 0 [name] => bill [picture] => 0 [data] => b:0; ) [access] => 1 ) ) ) [field_show_cropped_image] => Array ( [und] => Array ( [0] => Array ( [value] => 1 ) ) ) [metatags] => Array ( [und] => Array ( [og:image] => Array ( [value] => ) [article:author] => Array ( ) [article:publisher] => Array ( ) [article:section] => Array ( ) [article:tag] => Array ( ) [article:published_time] => Array ( ) [article:modified_time] => Array ( ) [article:expiration_time] => Array ( ) [profile:first_name] => Array ( ) [profile:last_name] => Array ( ) [profile:username] => Array ( ) [profile:gender] => Array ( ) [book:author] => Array ( ) [book:isbn] => Array ( ) [book:release_date] => Array ( ) [book:tag] => Array ( ) [video:actor] => Array ( ) [video:actor:role] => Array ( ) [video:director] => Array ( ) [video:writer] => Array ( ) [video:duration] => Array ( ) [video:release_date] => Array ( ) [video:tag] => Array ( ) [video:series] => Array ( ) ) ) [rdf_mapping] => Array ( [rdftype] => Array ( [0] => sioc:Item [1] => foaf:Document ) [title] => Array ( [predicates] => Array ( [0] => dc:title ) ) [created] => Array ( [predicates] => Array ( [0] => dc:date [1] => dc:created ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [changed] => Array ( [predicates] => Array ( [0] => dc:modified ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [body] => Array ( [predicates] => Array ( [0] => content:encoded ) ) [uid] => Array ( [predicates] => Array ( [0] => sioc:has_creator ) [type] => rel ) [name] => Array ( [predicates] => Array ( [0] => foaf:name ) ) [comment_count] => Array ( [predicates] => Array ( [0] => sioc:num_replies ) [datatype] => xsd:integer ) [last_activity] => Array ( [predicates] => Array ( [0] => sioc:last_activity_date ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) ) [path] => Array ( [pathauto] => 1 ) [cid] => 0 [last_comment_timestamp] => 1533067977 [last_comment_name] => [last_comment_uid] => 118 [comment_count] => 0 [name] => mollie [picture] => 0 [data] => b:0; [entity_view_prepared] => 1 ) [#items] => Array ( [0] => Array ( [value] =>

Last week, in an effort to prevent a possible trade war over U.S. steel and aluminum tariffs, the President of the European Commission (EC) Jean-Claude Juncker met in Washington with U.S. President Donald Trump. They struck an agreement about Europe buying more U.S. LNG. But as noted by many analysts, neither side can really make this happen.

The agreement includes very few details: Juncker committed Europe to significantly increase their volume of U.S. LNG imports, while Trump agreed to send more. Yet neither person making the promises has much influence on fulfilling them. The LNG that originates from U.S. coasts does not belong to the U.S. government but to profit-seeking private companies. The U.S. government can encourage LNG production—by providing a hospitable regulatory and legal environment—but it cannot force companies to send products to a specific region or country.

On his part, Juncker represents the EU but is ultimately dependent on individual EU member decisions. The EU cannot force its members to import U.S. LNG, but it can motivate or make it possible through investment in and financing of LNG infrastructure.

Going further, analysts are not sure whether additional LNG importing capacity would ultimately attract U.S. LNG. Some point to the existing capacity that is currently underused, a result of inadequate LNG demand and LNG prices that are high in comparison to the piped Russian gas. In addition, there is the question of LNG competition from cheaper and/or more proximate producers such as Norway, Qatar or, most recently, Russia.

Today’s U.S. producers are lured to Asia, where higher prices provide higher profit margins. Thus, even if more terminals are built, it is not a given that these terminals will maximize capacity or draw LNG from the U.S.

In the meantime, Russia has noted record-level highs in natural gas delivery to Europe in 2016 and 2017. And new, more secure transport routes are being built (Nord Stream 2, Turkish Stream) to deliver the abundant and low-cost Russian gas to Europe.

But while Juncker’s promise of large U.S. LNG imports may never materialize, his commitment to building new LNG terminals may actually be an important part of the U.S.-EU natural gas and energy security strategy.

Strategically placed (see Figure 1), new terminals could impact Russian pipeline gas deliveries—if not in volume, then at least in price—while dulling the geopolitical benefits Russia is deriving from its dominant supplier position. My recent research with Gabriel Collins identifies in detail the elements needed to achieve this goal. In a nutshell, the EU must:

  1. Build terminals in areas that are currently highly dependent on Russian gas;
  2. Ramp up underutilized LNG import capacity—with pipelines and interconnectors that take gas into areas that lack gas diversity;
  3. Push harder for market-based rules to govern the natural gas market within EU member states, to encourage competition and spawn interest from U.S. LNG producers.

Figure 1. Priority Zones for Geoeconomic Gas Investments 

Source: Collins & Mikulska, 2018.

Would all this bring a rush of U.S. LNG onto the European shores?

Unlikely. U.S. LNG is expected to continue to flow to Asia, where prices and demand are advantageous for U.S. producers.

But as much or as little of the U.S. LNG that would actually reach Europe would not be inconsequential.

LNG infrastructure in Europe would provide ability for the U.S. LNG to feed into the market whenever price disruptions emerge. As such it would provide a price floor and protection from extraction of economic rents by a dominant supplier.

In addition, the deliveries would neutralize geopolitical influence Russia as such supplier has yielded (also a major win for the U.S.).  In economic terms, activating more LNG capacity and more potential demand, would be beneficial for U.S. LNG producers. Even if their products never reach European shores, European LNG demand it will impact the industry via displacement: non-U.S. LNG delivered to Europe makes space for U.S deliveries elsewhere, including China or India, for example.

[summary] => [format] => full_html [safe_value] =>

Last week, in an effort to prevent a possible trade war over U.S. steel and aluminum tariffs, the President of the European Commission (EC) Jean-Claude Juncker met in Washington with U.S. President Donald Trump. They struck an agreement about Europe buying more U.S. LNG. But as noted by many analysts, neither side can really make this happen.

The agreement includes very few details: Juncker committed Europe to significantly increase their volume of U.S. LNG imports, while Trump agreed to send more. Yet neither person making the promises has much influence on fulfilling them. The LNG that originates from U.S. coasts does not belong to the U.S. government but to profit-seeking private companies. The U.S. government can encourage LNG production—by providing a hospitable regulatory and legal environment—but it cannot force companies to send products to a specific region or country.

On his part, Juncker represents the EU but is ultimately dependent on individual EU member decisions. The EU cannot force its members to import U.S. LNG, but it can motivate or make it possible through investment in and financing of LNG infrastructure.

Going further, analysts are not sure whether additional LNG importing capacity would ultimately attract U.S. LNG. Some point to the existing capacity that is currently underused, a result of inadequate LNG demand and LNG prices that are high in comparison to the piped Russian gas. In addition, there is the question of LNG competition from cheaper and/or more proximate producers such as Norway, Qatar or, most recently, Russia.

Today’s U.S. producers are lured to Asia, where higher prices provide higher profit margins. Thus, even if more terminals are built, it is not a given that these terminals will maximize capacity or draw LNG from the U.S.

In the meantime, Russia has noted record-level highs in natural gas delivery to Europe in 2016 and 2017. And new, more secure transport routes are being built (Nord Stream 2, Turkish Stream) to deliver the abundant and low-cost Russian gas to Europe.

But while Juncker’s promise of large U.S. LNG imports may never materialize, his commitment to building new LNG terminals may actually be an important part of the U.S.-EU natural gas and energy security strategy.

Strategically placed (see Figure 1), new terminals could impact Russian pipeline gas deliveries—if not in volume, then at least in price—while dulling the geopolitical benefits Russia is deriving from its dominant supplier position. My recent research with Gabriel Collins identifies in detail the elements needed to achieve this goal. In a nutshell, the EU must:

  1. Build terminals in areas that are currently highly dependent on Russian gas;
  2. Ramp up underutilized LNG import capacity—with pipelines and interconnectors that take gas into areas that lack gas diversity;
  3. Push harder for market-based rules to govern the natural gas market within EU member states, to encourage competition and spawn interest from U.S. LNG producers.

Figure 1. Priority Zones for Geoeconomic Gas Investments 

Source: Collins & Mikulska, 2018.

Would all this bring a rush of U.S. LNG onto the European shores?

Unlikely. U.S. LNG is expected to continue to flow to Asia, where prices and demand are advantageous for U.S. producers.

But as much or as little of the U.S. LNG that would actually reach Europe would not be inconsequential.

LNG infrastructure in Europe would provide ability for the U.S. LNG to feed into the market whenever price disruptions emerge. As such it would provide a price floor and protection from extraction of economic rents by a dominant supplier.

In addition, the deliveries would neutralize geopolitical influence Russia as such supplier has yielded (also a major win for the U.S.).  In economic terms, activating more LNG capacity and more potential demand, would be beneficial for U.S. LNG producers. Even if their products never reach European shores, European LNG demand it will impact the industry via displacement: non-U.S. LNG delivered to Europe makes space for U.S deliveries elsewhere, including China or India, for example.

[safe_summary] => ) ) [#formatter] => text_default [0] => Array ( [#markup] =>

Last week, in an effort to prevent a possible trade war over U.S. steel and aluminum tariffs, the President of the European Commission (EC) Jean-Claude Juncker met in Washington with U.S. President Donald Trump. They struck an agreement about Europe buying more U.S. LNG. But as noted by many analysts, neither side can really make this happen.

The agreement includes very few details: Juncker committed Europe to significantly increase their volume of U.S. LNG imports, while Trump agreed to send more. Yet neither person making the promises has much influence on fulfilling them. The LNG that originates from U.S. coasts does not belong to the U.S. government but to profit-seeking private companies. The U.S. government can encourage LNG production—by providing a hospitable regulatory and legal environment—but it cannot force companies to send products to a specific region or country.

On his part, Juncker represents the EU but is ultimately dependent on individual EU member decisions. The EU cannot force its members to import U.S. LNG, but it can motivate or make it possible through investment in and financing of LNG infrastructure.

Going further, analysts are not sure whether additional LNG importing capacity would ultimately attract U.S. LNG. Some point to the existing capacity that is currently underused, a result of inadequate LNG demand and LNG prices that are high in comparison to the piped Russian gas. In addition, there is the question of LNG competition from cheaper and/or more proximate producers such as Norway, Qatar or, most recently, Russia.

Today’s U.S. producers are lured to Asia, where higher prices provide higher profit margins. Thus, even if more terminals are built, it is not a given that these terminals will maximize capacity or draw LNG from the U.S.

In the meantime, Russia has noted record-level highs in natural gas delivery to Europe in 2016 and 2017. And new, more secure transport routes are being built (Nord Stream 2, Turkish Stream) to deliver the abundant and low-cost Russian gas to Europe.

But while Juncker’s promise of large U.S. LNG imports may never materialize, his commitment to building new LNG terminals may actually be an important part of the U.S.-EU natural gas and energy security strategy.

Strategically placed (see Figure 1), new terminals could impact Russian pipeline gas deliveries—if not in volume, then at least in price—while dulling the geopolitical benefits Russia is deriving from its dominant supplier position. My recent research with Gabriel Collins identifies in detail the elements needed to achieve this goal. In a nutshell, the EU must:

  1. Build terminals in areas that are currently highly dependent on Russian gas;
  2. Ramp up underutilized LNG import capacity—with pipelines and interconnectors that take gas into areas that lack gas diversity;
  3. Push harder for market-based rules to govern the natural gas market within EU member states, to encourage competition and spawn interest from U.S. LNG producers.

Figure 1. Priority Zones for Geoeconomic Gas Investments 

Source: Collins & Mikulska, 2018.

Would all this bring a rush of U.S. LNG onto the European shores?

Unlikely. U.S. LNG is expected to continue to flow to Asia, where prices and demand are advantageous for U.S. producers.

But as much or as little of the U.S. LNG that would actually reach Europe would not be inconsequential.

LNG infrastructure in Europe would provide ability for the U.S. LNG to feed into the market whenever price disruptions emerge. As such it would provide a price floor and protection from extraction of economic rents by a dominant supplier.

In addition, the deliveries would neutralize geopolitical influence Russia as such supplier has yielded (also a major win for the U.S.).  In economic terms, activating more LNG capacity and more potential demand, would be beneficial for U.S. LNG producers. Even if their products never reach European shores, European LNG demand it will impact the industry via displacement: non-U.S. LNG delivered to Europe makes space for U.S deliveries elsewhere, including China or India, for example.

) ) [field_more_like_this] => Array ( [#theme] => field [#weight] => 6 [#title] => More Like This [#access] => 1 [#label_display] => above [#view_mode] => full [#language] => und [#field_name] => field_more_like_this [#field_type] => entityreference [#field_translatable] => 0 [#entity_type] => node [#bundle] => wp_blog [#object] => stdClass Object ( [vid] => 8775 [uid] => 118 [title] => A Closer Look at the Trump and Juncker Agreement [log] => [status] => 1 [comment] => 1 [promote] => 0 [sticky] => 0 [nid] => 6636 [type] => wp_blog [language] => und [created] => 1533067977 [changed] => 1533127312 [tnid] => 0 [translate] => 0 [revision_timestamp] => 1533127312 [revision_uid] => 90 [body] => Array ( [und] => Array ( [0] => Array ( [value] =>

Last week, in an effort to prevent a possible trade war over U.S. steel and aluminum tariffs, the President of the European Commission (EC) Jean-Claude Juncker met in Washington with U.S. President Donald Trump. They struck an agreement about Europe buying more U.S. LNG. But as noted by many analysts, neither side can really make this happen.

The agreement includes very few details: Juncker committed Europe to significantly increase their volume of U.S. LNG imports, while Trump agreed to send more. Yet neither person making the promises has much influence on fulfilling them. The LNG that originates from U.S. coasts does not belong to the U.S. government but to profit-seeking private companies. The U.S. government can encourage LNG production—by providing a hospitable regulatory and legal environment—but it cannot force companies to send products to a specific region or country.

On his part, Juncker represents the EU but is ultimately dependent on individual EU member decisions. The EU cannot force its members to import U.S. LNG, but it can motivate or make it possible through investment in and financing of LNG infrastructure.

Going further, analysts are not sure whether additional LNG importing capacity would ultimately attract U.S. LNG. Some point to the existing capacity that is currently underused, a result of inadequate LNG demand and LNG prices that are high in comparison to the piped Russian gas. In addition, there is the question of LNG competition from cheaper and/or more proximate producers such as Norway, Qatar or, most recently, Russia.

Today’s U.S. producers are lured to Asia, where higher prices provide higher profit margins. Thus, even if more terminals are built, it is not a given that these terminals will maximize capacity or draw LNG from the U.S.

In the meantime, Russia has noted record-level highs in natural gas delivery to Europe in 2016 and 2017. And new, more secure transport routes are being built (Nord Stream 2, Turkish Stream) to deliver the abundant and low-cost Russian gas to Europe.

But while Juncker’s promise of large U.S. LNG imports may never materialize, his commitment to building new LNG terminals may actually be an important part of the U.S.-EU natural gas and energy security strategy.

Strategically placed (see Figure 1), new terminals could impact Russian pipeline gas deliveries—if not in volume, then at least in price—while dulling the geopolitical benefits Russia is deriving from its dominant supplier position. My recent research with Gabriel Collins identifies in detail the elements needed to achieve this goal. In a nutshell, the EU must:

  1. Build terminals in areas that are currently highly dependent on Russian gas;
  2. Ramp up underutilized LNG import capacity—with pipelines and interconnectors that take gas into areas that lack gas diversity;
  3. Push harder for market-based rules to govern the natural gas market within EU member states, to encourage competition and spawn interest from U.S. LNG producers.

Figure 1. Priority Zones for Geoeconomic Gas Investments 

Source: Collins & Mikulska, 2018.

Would all this bring a rush of U.S. LNG onto the European shores?

Unlikely. U.S. LNG is expected to continue to flow to Asia, where prices and demand are advantageous for U.S. producers.

But as much or as little of the U.S. LNG that would actually reach Europe would not be inconsequential.

LNG infrastructure in Europe would provide ability for the U.S. LNG to feed into the market whenever price disruptions emerge. As such it would provide a price floor and protection from extraction of economic rents by a dominant supplier.

In addition, the deliveries would neutralize geopolitical influence Russia as such supplier has yielded (also a major win for the U.S.).  In economic terms, activating more LNG capacity and more potential demand, would be beneficial for U.S. LNG producers. Even if their products never reach European shores, European LNG demand it will impact the industry via displacement: non-U.S. LNG delivered to Europe makes space for U.S deliveries elsewhere, including China or India, for example.

[summary] => [format] => full_html [safe_value] =>

Last week, in an effort to prevent a possible trade war over U.S. steel and aluminum tariffs, the President of the European Commission (EC) Jean-Claude Juncker met in Washington with U.S. President Donald Trump. They struck an agreement about Europe buying more U.S. LNG. But as noted by many analysts, neither side can really make this happen.

The agreement includes very few details: Juncker committed Europe to significantly increase their volume of U.S. LNG imports, while Trump agreed to send more. Yet neither person making the promises has much influence on fulfilling them. The LNG that originates from U.S. coasts does not belong to the U.S. government but to profit-seeking private companies. The U.S. government can encourage LNG production—by providing a hospitable regulatory and legal environment—but it cannot force companies to send products to a specific region or country.

On his part, Juncker represents the EU but is ultimately dependent on individual EU member decisions. The EU cannot force its members to import U.S. LNG, but it can motivate or make it possible through investment in and financing of LNG infrastructure.

Going further, analysts are not sure whether additional LNG importing capacity would ultimately attract U.S. LNG. Some point to the existing capacity that is currently underused, a result of inadequate LNG demand and LNG prices that are high in comparison to the piped Russian gas. In addition, there is the question of LNG competition from cheaper and/or more proximate producers such as Norway, Qatar or, most recently, Russia.

Today’s U.S. producers are lured to Asia, where higher prices provide higher profit margins. Thus, even if more terminals are built, it is not a given that these terminals will maximize capacity or draw LNG from the U.S.

In the meantime, Russia has noted record-level highs in natural gas delivery to Europe in 2016 and 2017. And new, more secure transport routes are being built (Nord Stream 2, Turkish Stream) to deliver the abundant and low-cost Russian gas to Europe.

But while Juncker’s promise of large U.S. LNG imports may never materialize, his commitment to building new LNG terminals may actually be an important part of the U.S.-EU natural gas and energy security strategy.

Strategically placed (see Figure 1), new terminals could impact Russian pipeline gas deliveries—if not in volume, then at least in price—while dulling the geopolitical benefits Russia is deriving from its dominant supplier position. My recent research with Gabriel Collins identifies in detail the elements needed to achieve this goal. In a nutshell, the EU must:

  1. Build terminals in areas that are currently highly dependent on Russian gas;
  2. Ramp up underutilized LNG import capacity—with pipelines and interconnectors that take gas into areas that lack gas diversity;
  3. Push harder for market-based rules to govern the natural gas market within EU member states, to encourage competition and spawn interest from U.S. LNG producers.

Figure 1. Priority Zones for Geoeconomic Gas Investments 

Source: Collins & Mikulska, 2018.

Would all this bring a rush of U.S. LNG onto the European shores?

Unlikely. U.S. LNG is expected to continue to flow to Asia, where prices and demand are advantageous for U.S. producers.

But as much or as little of the U.S. LNG that would actually reach Europe would not be inconsequential.

LNG infrastructure in Europe would provide ability for the U.S. LNG to feed into the market whenever price disruptions emerge. As such it would provide a price floor and protection from extraction of economic rents by a dominant supplier.

In addition, the deliveries would neutralize geopolitical influence Russia as such supplier has yielded (also a major win for the U.S.).  In economic terms, activating more LNG capacity and more potential demand, would be beneficial for U.S. LNG producers. Even if their products never reach European shores, European LNG demand it will impact the industry via displacement: non-U.S. LNG delivered to Europe makes space for U.S deliveries elsewhere, including China or India, for example.

[safe_summary] => ) ) ) [taxonomy_wp_blog_tags] => Array ( ) [field_intro_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 2804 [uid] => 118 [filename] => 1028854607.jpg [uri] => public://1028854607.jpg [filemime] => image/jpeg [filesize] => 94892 [status] => 1 [timestamp] => 1533068142 [focus_rect] => [crop_rect] => [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 1000 [height] => 541 ) ) ) [field_blog_author] => Array ( [und] => Array ( [0] => Array ( [value] => Anna Mikulska [format] => [safe_value] => Anna Mikulska ) ) ) [field_image_caption] => Array ( [und] => Array ( [0] => Array ( [value] => Source: Sputnik International [format] => [safe_value] => Source: Sputnik International ) ) ) [field_set_as_featured_] => Array ( [und] => Array ( [0] => Array ( [value] => no ) ) ) [field_authors] => Array ( [und] => Array ( [0] => Array ( [target_id] => 1741 ) ) ) [field_addthis] => Array ( [und] => Array ( [0] => Array ( [value] => Dummy value ) ) ) [field_teaser] => Array ( [und] => Array ( [0] => Array ( [value] =>

The recent LNG agreement may not have teeth, but it might have impact.

[format] => full_html [safe_value] =>

The recent LNG agreement may not have teeth, but it might have impact.

) ) ) [field_primary_theme] => Array ( [und] => Array ( [0] => Array ( [tid] => 203 ) ) ) [field_secondary_themes] => Array ( [und] => Array ( [0] => Array ( [tid] => 204 ) ) ) [field_exclude] => Array ( [und] => Array ( [0] => Array ( [value] => 0 ) ) ) [field_more_like_this] => Array ( [und] => Array ( [0] => Array ( [target_id] => 4612 [entity] => stdClass Object ( [vid] => 8246 [uid] => 118 [title] => Yamal LNG – A Big Win for Russian Gas? [log] => [status] => 1 [comment] => 1 [promote] => 0 [sticky] => 0 [nid] => 4612 [type] => wp_blog [language] => und [created] => 1515604279 [changed] => 1531354760 [tnid] => 0 [translate] => 0 [revision_timestamp] => 1531354760 [revision_uid] => 1 [body] => Array ( [und] => Array ( [0] => Array ( [value] =>

On December 8, a first LNG cargo left Russia’s Yamal Peninsula. The event has been considered a great win not only by Yamal LNG shareholders but also by the Russian government, which sees the project as a first step to Russia’s becoming the world’s top LNG player. Yamal LNG was completed on time despite difficult Arctic conditions and technological and financial difficulties compounded by U.S. sanctions. But, as it often happens, the reality and the effects of Russia’s new endeavor are more nuanced.

To begin, Yamal LNG has not been the first Russian LNG facility. The first one—Sakhalin 2—has been operating since 2009, delivering LNG mainly to the Asia-Pacific region. The project has been managed by state-owned Gazprom, until recently, the only Russian company allowed to export natural gas.

In 2013, the Russian government allowed Russian companies other than Gazprom to export natural gas but only in the form of LNG while keeping Gazprom export monopoly in piped gas. The decision allowed Novatek, a private Russian company, to pursue the Yamal project.

The project was completed on time despite significant headwinds caused by U.S. sanctions, which have blocked technology transfer and made financing of the investment extremely difficult. But at the end, Novatek was able to secure both financing and technology transfer thanks to collaboration with France’s Total, China’s National Petroleum Corportation and China’s Silk Road Fund. But the project could not be successful if not for significant support from the Russian government, which extended a 12-year Mineral Extraction Tax holiday toward the project, subsidized part of construction activity, and exempted LNG from export taxes.

Yamal’s success stands in stark contrast to the failure of LNG projects planned by Russian national companies Gazprom and Rosneft.  As a result, Novatek has grown to Russia’s LNG leader—protected but not owned by the Russian government. This realization should give pause to Gazprom, particularly as it considers its position in Europe.

Similar to Sakhalin 2, Yamal LNG is focused on LNG delivery to Asia. However, due to Arctic conditions it is only able to do so directly during the summer months. Over the remaining part of the year, Yamal LNG will take a longer delivery route via Europe. Such availability of Yamal LNG in Europe over the cold period—when natural gas is particularly in demand—bodes well for the European market and EU’s push toward energy security and diversification of supply.

But this does not bode well for Gazprom’s position in Europe, as its list of competitors will expand from Norway, Qatar, and the U.S. to include also a Russian company. The pressure is even greater when one considers the pushback Gazprom has faced in Europe with respect to the company’s vertical structure and monopolistic practices,

The pushback institutionalized within the EU’s Third Energy Package has been visible on many levels, including: 1) difficulties to acquire a permit for a second set of pipelines (Nord Stream 2) that would bring more Russian gas under the Baltic Sea directly to Germany;  2) active litigation against Gazprom’s monopolistic practices, and 3) new infrastructure projects that involve new pipeline interconnectors and LNG import facilities that diversify European supply, .

All of the above make access to the European market increasingly difficult for Gazprom, but these conditions do help other natural gas suppliers, including Yamal LNG, which needs a winter home for its gas during the time when Artic temperatures limit direct delivery to Asia. As a result, Gazprom and Novatek may end up competing for the same market, which may undermine Gazprom’s market position, and potentially reduce Russia’s geopolitical influence in regions most dependent on Russian gas.

To sum up, Novatek’s Yamal LNG has been an undisputed accomplishment, but it is unclear whether it will have a net positive influence on Russia’s position in natural gas exports. It seems that Novatek’s gain can become Gazprom’s loss—if not Russia’s loss—in Europe and possibly beyond.

[summary] => [format] => full_html [safe_value] =>

On December 8, a first LNG cargo left Russia’s Yamal Peninsula. The event has been considered a great win not only by Yamal LNG shareholders but also by the Russian government, which sees the project as a first step to Russia’s becoming the world’s top LNG player. Yamal LNG was completed on time despite difficult Arctic conditions and technological and financial difficulties compounded by U.S. sanctions. But, as it often happens, the reality and the effects of Russia’s new endeavor are more nuanced.

To begin, Yamal LNG has not been the first Russian LNG facility. The first one—Sakhalin 2—has been operating since 2009, delivering LNG mainly to the Asia-Pacific region. The project has been managed by state-owned Gazprom, until recently, the only Russian company allowed to export natural gas.

In 2013, the Russian government allowed Russian companies other than Gazprom to export natural gas but only in the form of LNG while keeping Gazprom export monopoly in piped gas. The decision allowed Novatek, a private Russian company, to pursue the Yamal project.

The project was completed on time despite significant headwinds caused by U.S. sanctions, which have blocked technology transfer and made financing of the investment extremely difficult. But at the end, Novatek was able to secure both financing and technology transfer thanks to collaboration with France’s Total, China’s National Petroleum Corportation and China’s Silk Road Fund. But the project could not be successful if not for significant support from the Russian government, which extended a 12-year Mineral Extraction Tax holiday toward the project, subsidized part of construction activity, and exempted LNG from export taxes.

Yamal’s success stands in stark contrast to the failure of LNG projects planned by Russian national companies Gazprom and Rosneft.  As a result, Novatek has grown to Russia’s LNG leader—protected but not owned by the Russian government. This realization should give pause to Gazprom, particularly as it considers its position in Europe.

Similar to Sakhalin 2, Yamal LNG is focused on LNG delivery to Asia. However, due to Arctic conditions it is only able to do so directly during the summer months. Over the remaining part of the year, Yamal LNG will take a longer delivery route via Europe. Such availability of Yamal LNG in Europe over the cold period—when natural gas is particularly in demand—bodes well for the European market and EU’s push toward energy security and diversification of supply.

But this does not bode well for Gazprom’s position in Europe, as its list of competitors will expand from Norway, Qatar, and the U.S. to include also a Russian company. The pressure is even greater when one considers the pushback Gazprom has faced in Europe with respect to the company’s vertical structure and monopolistic practices,

The pushback institutionalized within the EU’s Third Energy Package has been visible on many levels, including: 1) difficulties to acquire a permit for a second set of pipelines (Nord Stream 2) that would bring more Russian gas under the Baltic Sea directly to Germany;  2) active litigation against Gazprom’s monopolistic practices, and 3) new infrastructure projects that involve new pipeline interconnectors and LNG import facilities that diversify European supply, .

All of the above make access to the European market increasingly difficult for Gazprom, but these conditions do help other natural gas suppliers, including Yamal LNG, which needs a winter home for its gas during the time when Artic temperatures limit direct delivery to Asia. As a result, Gazprom and Novatek may end up competing for the same market, which may undermine Gazprom’s market position, and potentially reduce Russia’s geopolitical influence in regions most dependent on Russian gas.

To sum up, Novatek’s Yamal LNG has been an undisputed accomplishment, but it is unclear whether it will have a net positive influence on Russia’s position in natural gas exports. It seems that Novatek’s gain can become Gazprom’s loss—if not Russia’s loss—in Europe and possibly beyond.

[safe_summary] => ) ) ) [taxonomy_wp_blog_tags] => Array ( ) [field_intro_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 2390 [uid] => 118 [filename] => 59e71f13fc7e93670a8b4567.jpg [uri] => public://59e71f13fc7e93670a8b4567.jpg [filemime] => image/jpeg [filesize] => 107658 [status] => 1 [timestamp] => 1515604279 [focus_rect] => [crop_rect] => [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 790 [height] => 444 ) ) ) [field_blog_author] => Array ( [und] => Array ( [0] => Array ( [value] => Anna Mikulska [format] => [safe_value] => Anna Mikulska ) ) ) [field_image_caption] => Array ( [und] => Array ( [0] => Array ( [value] => Photo via: RT.com [format] => [safe_value] => Photo via: RT.com ) ) ) [field_set_as_featured_] => Array ( [und] => Array ( [0] => Array ( [value] => no ) ) ) [field_authors] => Array ( [und] => Array ( [0] => Array ( [target_id] => 1741 ) ) ) [field_addthis] => Array ( [und] => Array ( [0] => Array ( [value] => Dummy value ) ) ) [field_teaser] => Array ( ) [field_primary_theme] => Array ( ) [field_secondary_themes] => Array ( ) [field_exclude] => Array ( ) [field_more_like_this] => Array ( ) [field_show_cropped_image] => Array ( [und] => Array ( [0] => Array ( [value] => 1 ) ) ) [metatags] => Array ( [und] => Array ( [article:published_time] => Array ( ) [article:modified_time] => Array ( ) ) ) [rdf_mapping] => Array ( [rdftype] => Array ( [0] => sioc:Item [1] => foaf:Document ) [title] => Array ( [predicates] => Array ( [0] => dc:title ) ) [created] => Array ( [predicates] => Array ( [0] => dc:date [1] => dc:created ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [changed] => Array ( [predicates] => Array ( [0] => dc:modified ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [body] => Array ( [predicates] => Array ( [0] => content:encoded ) ) [uid] => Array ( [predicates] => Array ( [0] => sioc:has_creator ) [type] => rel ) [name] => Array ( [predicates] => Array ( [0] => foaf:name ) ) [comment_count] => Array ( [predicates] => Array ( [0] => sioc:num_replies ) [datatype] => xsd:integer ) [last_activity] => Array ( [predicates] => Array ( [0] => sioc:last_activity_date ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) ) [path] => Array ( [pathauto] => 1 ) [cid] => 0 [last_comment_timestamp] => 1515604279 [last_comment_name] => [last_comment_uid] => 118 [comment_count] => 0 [name] => mollie [picture] => 0 [data] => b:0; ) [access] => 1 ) [1] => Array ( [target_id] => 3231 [entity] => stdClass Object ( [vid] => 4205 [uid] => 10 [title] => How U.S. LNG is Changing the Global Gas Market [log] => [status] => 1 [comment] => 1 [promote] => 0 [sticky] => 0 [nid] => 3231 [type] => podcast [language] => und [created] => 1488258000 [changed] => 1530890595 [tnid] => 0 [translate] => 0 [revision_timestamp] => 1530890595 [revision_uid] => 10 [body] => Array ( [und] => Array ( [0] => Array ( [value] =>

In 2016 the first shipment of U.S. liquefied natural gas left by tanker from a terminal on the Gulf coast.  In the year since, U.S. LNG has made its way to customers around the globe, increasing competition in the gas market and threatening to loosen the grip of some suppliers on captive markets.

Guest Anna Mikulska, Senior Fellow at the Kleinman Center for Energy Policy, talks about the globalization of the natural gas market, the competitiveness of U.S. exports and their implications for relationships abroad.

 

[summary] => [format] => full_html [safe_value] =>

In 2016 the first shipment of U.S. liquefied natural gas left by tanker from a terminal on the Gulf coast.  In the year since, U.S. LNG has made its way to customers around the globe, increasing competition in the gas market and threatening to loosen the grip of some suppliers on captive markets.

Guest Anna Mikulska, Senior Fellow at the Kleinman Center for Energy Policy, talks about the globalization of the natural gas market, the competitiveness of U.S. exports and their implications for relationships abroad.

 

[safe_summary] => ) ) ) [field_date] => Array ( [und] => Array ( [0] => Array ( [value] => 2017-02-28 00:00:00 [timezone] => America/New_York [timezone_db] => America/New_York [date_type] => datetime ) ) ) [field_episode] => Array ( [und] => Array ( [0] => Array ( [value] => EPN07 [format] => [safe_value] => EPN07 ) ) ) [field_episode_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 1673 [uid] => 10 [filename] => EPN 07 Square.jpg [uri] => public://epn_image/EPN 07 Square.jpg [filemime] => image/jpeg [filesize] => 162022 [status] => 1 [timestamp] => 1488221733 [focus_rect] => [crop_rect] => [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 500 [height] => 500 ) ) ) [field_player] => Array ( [und] => Array ( [0] => Array ( [value] => [format] => no_editor [safe_value] => ) ) ) [field_teaser] => Array ( [und] => Array ( [0] => Array ( [value] =>

U.S. natural gas exports are helping to globalize the gas market, putting traditional buyer-seller relationships to the test and raising the possibility of far-reaching geopolitical consequences.

[format] => full_html [safe_value] =>

U.S. natural gas exports are helping to globalize the gas market, putting traditional buyer-seller relationships to the test and raising the possibility of far-reaching geopolitical consequences.

) ) ) [field_top_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 1675 [uid] => 10 [filename] => arctic_princess-9271248-lng_tanker-ship-222.jpg [uri] => public://top_image/arctic_princess-9271248-lng_tanker-ship-222.jpg [filemime] => image/jpeg [filesize] => 1571110 [status] => 1 [timestamp] => 1488221733 [focus_rect] => 0,123,1800,642 [crop_rect] => 0,123,1800,642 [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 1800 [height] => 1350 ) ) ) [field_embed_small] => Array ( [und] => Array ( [0] => Array ( [value] => [format] => no_editor [safe_value] => ) ) ) [field_teaser_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 1674 [uid] => 10 [filename] => arctic_princess-9271248-lng_tanker-ship-222.jpg [uri] => public://arctic_princess-9271248-lng_tanker-ship-222.jpg [filemime] => image/jpeg [filesize] => 356661 [status] => 1 [timestamp] => 1488221733 [focus_rect] => 190,0,429,428 [crop_rect] => 190,0,429,428 [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 800 [height] => 600 ) ) ) [field_set_as_featured_] => Array ( ) [field_authors] => Array ( [und] => Array ( [0] => Array ( [target_id] => 1741 ) ) ) [field_addthis] => Array ( [und] => Array ( [0] => Array ( [value] => Dummy value ) ) ) [field_primary_theme] => Array ( [und] => Array ( [0] => Array ( [tid] => 203 ) ) ) [field_secondary_themes] => Array ( [und] => Array ( [0] => Array ( [tid] => 204 ) ) ) [field_exclude] => Array ( [und] => Array ( [0] => Array ( [value] => 0 ) ) ) [field_more_like_this] => Array ( [und] => Array ( [0] => Array ( [target_id] => 2380 ) [1] => Array ( [target_id] => 6148 ) [2] => Array ( [target_id] => 4612 ) ) ) [metatags] => Array ( [und] => Array ( [og:image] => Array ( [value] => public://top_image/arctic_princess-9271248-lng_tanker-ship-222.jpg ) [article:author] => Array ( ) [article:publisher] => Array ( ) [article:section] => Array ( ) [article:tag] => Array ( ) [article:published_time] => Array ( ) [article:modified_time] => Array ( ) [article:expiration_time] => Array ( ) [profile:first_name] => Array ( ) [profile:last_name] => Array ( ) [profile:username] => Array ( ) [profile:gender] => Array ( ) [book:author] => Array ( ) [book:isbn] => Array ( ) [book:release_date] => Array ( ) [book:tag] => Array ( ) [video:actor] => Array ( ) [video:actor:role] => Array ( ) [video:director] => Array ( ) [video:writer] => Array ( ) [video:duration] => Array ( ) [video:release_date] => Array ( ) [video:tag] => Array ( ) [video:series] => Array ( ) ) ) [rdf_mapping] => Array ( [rdftype] => Array ( [0] => sioc:Item [1] => foaf:Document ) [title] => Array ( [predicates] => Array ( [0] => dc:title ) ) [created] => Array ( [predicates] => Array ( [0] => dc:date [1] => dc:created ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [changed] => Array ( [predicates] => Array ( [0] => dc:modified ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [body] => Array ( [predicates] => Array ( [0] => content:encoded ) ) [uid] => Array ( [predicates] => Array ( [0] => sioc:has_creator ) [type] => rel ) [name] => Array ( [predicates] => Array ( [0] => foaf:name ) ) [comment_count] => Array ( [predicates] => Array ( [0] => sioc:num_replies ) [datatype] => xsd:integer ) [last_activity] => Array ( [predicates] => Array ( [0] => sioc:last_activity_date ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) ) [path] => Array ( [pathauto] => 1 ) [cid] => 0 [last_comment_timestamp] => 1488221733 [last_comment_name] => [last_comment_uid] => 10 [comment_count] => 0 [name] => bill [picture] => 0 [data] => b:0; ) [access] => 1 ) ) ) [field_show_cropped_image] => Array ( [und] => Array ( [0] => Array ( [value] => 1 ) ) ) [metatags] => Array ( [und] => Array ( [og:image] => Array ( [value] => ) [article:author] => Array ( ) [article:publisher] => Array ( ) [article:section] => Array ( ) [article:tag] => Array ( ) [article:published_time] => Array ( ) [article:modified_time] => Array ( ) [article:expiration_time] => Array ( ) [profile:first_name] => Array ( ) [profile:last_name] => Array ( ) [profile:username] => Array ( ) [profile:gender] => Array ( ) [book:author] => Array ( ) [book:isbn] => Array ( ) [book:release_date] => Array ( ) [book:tag] => Array ( ) [video:actor] => Array ( ) [video:actor:role] => Array ( ) [video:director] => Array ( ) [video:writer] => Array ( ) [video:duration] => Array ( ) [video:release_date] => Array ( ) [video:tag] => Array ( ) [video:series] => Array ( ) ) ) [rdf_mapping] => Array ( [rdftype] => Array ( [0] => sioc:Item [1] => foaf:Document ) [title] => Array ( [predicates] => Array ( [0] => dc:title ) ) [created] => Array ( [predicates] => Array ( [0] => dc:date [1] => dc:created ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [changed] => Array ( [predicates] => Array ( [0] => dc:modified ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [body] => Array ( [predicates] => Array ( [0] => content:encoded ) ) [uid] => Array ( [predicates] => Array ( [0] => sioc:has_creator ) [type] => rel ) [name] => Array ( [predicates] => Array ( [0] => foaf:name ) ) [comment_count] => Array ( [predicates] => Array ( [0] => sioc:num_replies ) [datatype] => xsd:integer ) [last_activity] => Array ( [predicates] => Array ( [0] => sioc:last_activity_date ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) ) [path] => Array ( [pathauto] => 1 ) [cid] => 0 [last_comment_timestamp] => 1533067977 [last_comment_name] => [last_comment_uid] => 118 [comment_count] => 0 [name] => mollie [picture] => 0 [data] => b:0; [entity_view_prepared] => 1 ) [#items] => Array ( [0] => Array ( [target_id] => 4612 [entity] => stdClass Object ( [vid] => 8246 [uid] => 118 [title] => Yamal LNG – A Big Win for Russian Gas? [log] => [status] => 1 [comment] => 1 [promote] => 0 [sticky] => 0 [nid] => 4612 [type] => wp_blog [language] => und [created] => 1515604279 [changed] => 1531354760 [tnid] => 0 [translate] => 0 [revision_timestamp] => 1531354760 [revision_uid] => 1 [body] => Array ( [und] => Array ( [0] => Array ( [value] =>

On December 8, a first LNG cargo left Russia’s Yamal Peninsula. The event has been considered a great win not only by Yamal LNG shareholders but also by the Russian government, which sees the project as a first step to Russia’s becoming the world’s top LNG player. Yamal LNG was completed on time despite difficult Arctic conditions and technological and financial difficulties compounded by U.S. sanctions. But, as it often happens, the reality and the effects of Russia’s new endeavor are more nuanced.

To begin, Yamal LNG has not been the first Russian LNG facility. The first one—Sakhalin 2—has been operating since 2009, delivering LNG mainly to the Asia-Pacific region. The project has been managed by state-owned Gazprom, until recently, the only Russian company allowed to export natural gas.

In 2013, the Russian government allowed Russian companies other than Gazprom to export natural gas but only in the form of LNG while keeping Gazprom export monopoly in piped gas. The decision allowed Novatek, a private Russian company, to pursue the Yamal project.

The project was completed on time despite significant headwinds caused by U.S. sanctions, which have blocked technology transfer and made financing of the investment extremely difficult. But at the end, Novatek was able to secure both financing and technology transfer thanks to collaboration with France’s Total, China’s National Petroleum Corportation and China’s Silk Road Fund. But the project could not be successful if not for significant support from the Russian government, which extended a 12-year Mineral Extraction Tax holiday toward the project, subsidized part of construction activity, and exempted LNG from export taxes.

Yamal’s success stands in stark contrast to the failure of LNG projects planned by Russian national companies Gazprom and Rosneft.  As a result, Novatek has grown to Russia’s LNG leader—protected but not owned by the Russian government. This realization should give pause to Gazprom, particularly as it considers its position in Europe.

Similar to Sakhalin 2, Yamal LNG is focused on LNG delivery to Asia. However, due to Arctic conditions it is only able to do so directly during the summer months. Over the remaining part of the year, Yamal LNG will take a longer delivery route via Europe. Such availability of Yamal LNG in Europe over the cold period—when natural gas is particularly in demand—bodes well for the European market and EU’s push toward energy security and diversification of supply.

But this does not bode well for Gazprom’s position in Europe, as its list of competitors will expand from Norway, Qatar, and the U.S. to include also a Russian company. The pressure is even greater when one considers the pushback Gazprom has faced in Europe with respect to the company’s vertical structure and monopolistic practices,

The pushback institutionalized within the EU’s Third Energy Package has been visible on many levels, including: 1) difficulties to acquire a permit for a second set of pipelines (Nord Stream 2) that would bring more Russian gas under the Baltic Sea directly to Germany;  2) active litigation against Gazprom’s monopolistic practices, and 3) new infrastructure projects that involve new pipeline interconnectors and LNG import facilities that diversify European supply, .

All of the above make access to the European market increasingly difficult for Gazprom, but these conditions do help other natural gas suppliers, including Yamal LNG, which needs a winter home for its gas during the time when Artic temperatures limit direct delivery to Asia. As a result, Gazprom and Novatek may end up competing for the same market, which may undermine Gazprom’s market position, and potentially reduce Russia’s geopolitical influence in regions most dependent on Russian gas.

To sum up, Novatek’s Yamal LNG has been an undisputed accomplishment, but it is unclear whether it will have a net positive influence on Russia’s position in natural gas exports. It seems that Novatek’s gain can become Gazprom’s loss—if not Russia’s loss—in Europe and possibly beyond.

[summary] => [format] => full_html [safe_value] =>

On December 8, a first LNG cargo left Russia’s Yamal Peninsula. The event has been considered a great win not only by Yamal LNG shareholders but also by the Russian government, which sees the project as a first step to Russia’s becoming the world’s top LNG player. Yamal LNG was completed on time despite difficult Arctic conditions and technological and financial difficulties compounded by U.S. sanctions. But, as it often happens, the reality and the effects of Russia’s new endeavor are more nuanced.

To begin, Yamal LNG has not been the first Russian LNG facility. The first one—Sakhalin 2—has been operating since 2009, delivering LNG mainly to the Asia-Pacific region. The project has been managed by state-owned Gazprom, until recently, the only Russian company allowed to export natural gas.

In 2013, the Russian government allowed Russian companies other than Gazprom to export natural gas but only in the form of LNG while keeping Gazprom export monopoly in piped gas. The decision allowed Novatek, a private Russian company, to pursue the Yamal project.

The project was completed on time despite significant headwinds caused by U.S. sanctions, which have blocked technology transfer and made financing of the investment extremely difficult. But at the end, Novatek was able to secure both financing and technology transfer thanks to collaboration with France’s Total, China’s National Petroleum Corportation and China’s Silk Road Fund. But the project could not be successful if not for significant support from the Russian government, which extended a 12-year Mineral Extraction Tax holiday toward the project, subsidized part of construction activity, and exempted LNG from export taxes.

Yamal’s success stands in stark contrast to the failure of LNG projects planned by Russian national companies Gazprom and Rosneft.  As a result, Novatek has grown to Russia’s LNG leader—protected but not owned by the Russian government. This realization should give pause to Gazprom, particularly as it considers its position in Europe.

Similar to Sakhalin 2, Yamal LNG is focused on LNG delivery to Asia. However, due to Arctic conditions it is only able to do so directly during the summer months. Over the remaining part of the year, Yamal LNG will take a longer delivery route via Europe. Such availability of Yamal LNG in Europe over the cold period—when natural gas is particularly in demand—bodes well for the European market and EU’s push toward energy security and diversification of supply.

But this does not bode well for Gazprom’s position in Europe, as its list of competitors will expand from Norway, Qatar, and the U.S. to include also a Russian company. The pressure is even greater when one considers the pushback Gazprom has faced in Europe with respect to the company’s vertical structure and monopolistic practices,

The pushback institutionalized within the EU’s Third Energy Package has been visible on many levels, including: 1) difficulties to acquire a permit for a second set of pipelines (Nord Stream 2) that would bring more Russian gas under the Baltic Sea directly to Germany;  2) active litigation against Gazprom’s monopolistic practices, and 3) new infrastructure projects that involve new pipeline interconnectors and LNG import facilities that diversify European supply, .

All of the above make access to the European market increasingly difficult for Gazprom, but these conditions do help other natural gas suppliers, including Yamal LNG, which needs a winter home for its gas during the time when Artic temperatures limit direct delivery to Asia. As a result, Gazprom and Novatek may end up competing for the same market, which may undermine Gazprom’s market position, and potentially reduce Russia’s geopolitical influence in regions most dependent on Russian gas.

To sum up, Novatek’s Yamal LNG has been an undisputed accomplishment, but it is unclear whether it will have a net positive influence on Russia’s position in natural gas exports. It seems that Novatek’s gain can become Gazprom’s loss—if not Russia’s loss—in Europe and possibly beyond.

[safe_summary] => ) ) ) [taxonomy_wp_blog_tags] => Array ( ) [field_intro_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 2390 [uid] => 118 [filename] => 59e71f13fc7e93670a8b4567.jpg [uri] => public://59e71f13fc7e93670a8b4567.jpg [filemime] => image/jpeg [filesize] => 107658 [status] => 1 [timestamp] => 1515604279 [focus_rect] => [crop_rect] => [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 790 [height] => 444 ) ) ) [field_blog_author] => Array ( [und] => Array ( [0] => Array ( [value] => Anna Mikulska [format] => [safe_value] => Anna Mikulska ) ) ) [field_image_caption] => Array ( [und] => Array ( [0] => Array ( [value] => Photo via: RT.com [format] => [safe_value] => Photo via: RT.com ) ) ) [field_set_as_featured_] => Array ( [und] => Array ( [0] => Array ( [value] => no ) ) ) [field_authors] => Array ( [und] => Array ( [0] => Array ( [target_id] => 1741 ) ) ) [field_addthis] => Array ( [und] => Array ( [0] => Array ( [value] => Dummy value ) ) ) [field_teaser] => Array ( ) [field_primary_theme] => Array ( ) [field_secondary_themes] => Array ( ) [field_exclude] => Array ( ) [field_more_like_this] => Array ( ) [field_show_cropped_image] => Array ( [und] => Array ( [0] => Array ( [value] => 1 ) ) ) [metatags] => Array ( [und] => Array ( [article:published_time] => Array ( ) [article:modified_time] => Array ( ) ) ) [rdf_mapping] => Array ( [rdftype] => Array ( [0] => sioc:Item [1] => foaf:Document ) [title] => Array ( [predicates] => Array ( [0] => dc:title ) ) [created] => Array ( [predicates] => Array ( [0] => dc:date [1] => dc:created ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [changed] => Array ( [predicates] => Array ( [0] => dc:modified ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [body] => Array ( [predicates] => Array ( [0] => content:encoded ) ) [uid] => Array ( [predicates] => Array ( [0] => sioc:has_creator ) [type] => rel ) [name] => Array ( [predicates] => Array ( [0] => foaf:name ) ) [comment_count] => Array ( [predicates] => Array ( [0] => sioc:num_replies ) [datatype] => xsd:integer ) [last_activity] => Array ( [predicates] => Array ( [0] => sioc:last_activity_date ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) ) [path] => Array ( [pathauto] => 1 ) [cid] => 0 [last_comment_timestamp] => 1515604279 [last_comment_name] => [last_comment_uid] => 118 [comment_count] => 0 [name] => mollie [picture] => 0 [data] => b:0; ) [access] => 1 ) [1] => Array ( [target_id] => 3231 [entity] => stdClass Object ( [vid] => 4205 [uid] => 10 [title] => How U.S. LNG is Changing the Global Gas Market [log] => [status] => 1 [comment] => 1 [promote] => 0 [sticky] => 0 [nid] => 3231 [type] => podcast [language] => und [created] => 1488258000 [changed] => 1530890595 [tnid] => 0 [translate] => 0 [revision_timestamp] => 1530890595 [revision_uid] => 10 [body] => Array ( [und] => Array ( [0] => Array ( [value] =>

In 2016 the first shipment of U.S. liquefied natural gas left by tanker from a terminal on the Gulf coast.  In the year since, U.S. LNG has made its way to customers around the globe, increasing competition in the gas market and threatening to loosen the grip of some suppliers on captive markets.

Guest Anna Mikulska, Senior Fellow at the Kleinman Center for Energy Policy, talks about the globalization of the natural gas market, the competitiveness of U.S. exports and their implications for relationships abroad.

 

[summary] => [format] => full_html [safe_value] =>

In 2016 the first shipment of U.S. liquefied natural gas left by tanker from a terminal on the Gulf coast.  In the year since, U.S. LNG has made its way to customers around the globe, increasing competition in the gas market and threatening to loosen the grip of some suppliers on captive markets.

Guest Anna Mikulska, Senior Fellow at the Kleinman Center for Energy Policy, talks about the globalization of the natural gas market, the competitiveness of U.S. exports and their implications for relationships abroad.

 

[safe_summary] => ) ) ) [field_date] => Array ( [und] => Array ( [0] => Array ( [value] => 2017-02-28 00:00:00 [timezone] => America/New_York [timezone_db] => America/New_York [date_type] => datetime ) ) ) [field_episode] => Array ( [und] => Array ( [0] => Array ( [value] => EPN07 [format] => [safe_value] => EPN07 ) ) ) [field_episode_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 1673 [uid] => 10 [filename] => EPN 07 Square.jpg [uri] => public://epn_image/EPN 07 Square.jpg [filemime] => image/jpeg [filesize] => 162022 [status] => 1 [timestamp] => 1488221733 [focus_rect] => [crop_rect] => [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 500 [height] => 500 ) ) ) [field_player] => Array ( [und] => Array ( [0] => Array ( [value] => [format] => no_editor [safe_value] => ) ) ) [field_teaser] => Array ( [und] => Array ( [0] => Array ( [value] =>

U.S. natural gas exports are helping to globalize the gas market, putting traditional buyer-seller relationships to the test and raising the possibility of far-reaching geopolitical consequences.

[format] => full_html [safe_value] =>

U.S. natural gas exports are helping to globalize the gas market, putting traditional buyer-seller relationships to the test and raising the possibility of far-reaching geopolitical consequences.

) ) ) [field_top_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 1675 [uid] => 10 [filename] => arctic_princess-9271248-lng_tanker-ship-222.jpg [uri] => public://top_image/arctic_princess-9271248-lng_tanker-ship-222.jpg [filemime] => image/jpeg [filesize] => 1571110 [status] => 1 [timestamp] => 1488221733 [focus_rect] => 0,123,1800,642 [crop_rect] => 0,123,1800,642 [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 1800 [height] => 1350 ) ) ) [field_embed_small] => Array ( [und] => Array ( [0] => Array ( [value] => [format] => no_editor [safe_value] => ) ) ) [field_teaser_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 1674 [uid] => 10 [filename] => arctic_princess-9271248-lng_tanker-ship-222.jpg [uri] => public://arctic_princess-9271248-lng_tanker-ship-222.jpg [filemime] => image/jpeg [filesize] => 356661 [status] => 1 [timestamp] => 1488221733 [focus_rect] => 190,0,429,428 [crop_rect] => 190,0,429,428 [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 800 [height] => 600 ) ) ) [field_set_as_featured_] => Array ( ) [field_authors] => Array ( [und] => Array ( [0] => Array ( [target_id] => 1741 ) ) ) [field_addthis] => Array ( [und] => Array ( [0] => Array ( [value] => Dummy value ) ) ) [field_primary_theme] => Array ( [und] => Array ( [0] => Array ( [tid] => 203 ) ) ) [field_secondary_themes] => Array ( [und] => Array ( [0] => Array ( [tid] => 204 ) ) ) [field_exclude] => Array ( [und] => Array ( [0] => Array ( [value] => 0 ) ) ) [field_more_like_this] => Array ( [und] => Array ( [0] => Array ( [target_id] => 2380 ) [1] => Array ( [target_id] => 6148 ) [2] => Array ( [target_id] => 4612 ) ) ) [metatags] => Array ( [und] => Array ( [og:image] => Array ( [value] => public://top_image/arctic_princess-9271248-lng_tanker-ship-222.jpg ) [article:author] => Array ( ) [article:publisher] => Array ( ) [article:section] => Array ( ) [article:tag] => Array ( ) [article:published_time] => Array ( ) [article:modified_time] => Array ( ) [article:expiration_time] => Array ( ) [profile:first_name] => Array ( ) [profile:last_name] => Array ( ) [profile:username] => Array ( ) [profile:gender] => Array ( ) [book:author] => Array ( ) [book:isbn] => Array ( ) [book:release_date] => Array ( ) [book:tag] => Array ( ) [video:actor] => Array ( ) [video:actor:role] => Array ( ) [video:director] => Array ( ) [video:writer] => Array ( ) [video:duration] => Array ( ) [video:release_date] => Array ( ) [video:tag] => Array ( ) [video:series] => Array ( ) ) ) [rdf_mapping] => Array ( [rdftype] => Array ( [0] => sioc:Item [1] => foaf:Document ) [title] => Array ( [predicates] => Array ( [0] => dc:title ) ) [created] => Array ( [predicates] => Array ( [0] => dc:date [1] => dc:created ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [changed] => Array ( [predicates] => Array ( [0] => dc:modified ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [body] => Array ( [predicates] => Array ( [0] => content:encoded ) ) [uid] => Array ( [predicates] => Array ( [0] => sioc:has_creator ) [type] => rel ) [name] => Array ( [predicates] => Array ( [0] => foaf:name ) ) [comment_count] => Array ( [predicates] => Array ( [0] => sioc:num_replies ) [datatype] => xsd:integer ) [last_activity] => Array ( [predicates] => Array ( [0] => sioc:last_activity_date ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) ) [path] => Array ( [pathauto] => 1 ) [cid] => 0 [last_comment_timestamp] => 1488221733 [last_comment_name] => [last_comment_uid] => 10 [comment_count] => 0 [name] => bill [picture] => 0 [data] => b:0; ) [access] => 1 ) ) [#formatter] => entityreference_entity_id [0] => Array ( [#theme] => entityreference_entity_id [#item] => Array ( [target_id] => 4612 [entity] => stdClass Object ( [vid] => 8246 [uid] => 118 [title] => Yamal LNG – A Big Win for Russian Gas? [log] => [status] => 1 [comment] => 1 [promote] => 0 [sticky] => 0 [nid] => 4612 [type] => wp_blog [language] => und [created] => 1515604279 [changed] => 1531354760 [tnid] => 0 [translate] => 0 [revision_timestamp] => 1531354760 [revision_uid] => 1 [body] => Array ( [und] => Array ( [0] => Array ( [value] =>

On December 8, a first LNG cargo left Russia’s Yamal Peninsula. The event has been considered a great win not only by Yamal LNG shareholders but also by the Russian government, which sees the project as a first step to Russia’s becoming the world’s top LNG player. Yamal LNG was completed on time despite difficult Arctic conditions and technological and financial difficulties compounded by U.S. sanctions. But, as it often happens, the reality and the effects of Russia’s new endeavor are more nuanced.

To begin, Yamal LNG has not been the first Russian LNG facility. The first one—Sakhalin 2—has been operating since 2009, delivering LNG mainly to the Asia-Pacific region. The project has been managed by state-owned Gazprom, until recently, the only Russian company allowed to export natural gas.

In 2013, the Russian government allowed Russian companies other than Gazprom to export natural gas but only in the form of LNG while keeping Gazprom export monopoly in piped gas. The decision allowed Novatek, a private Russian company, to pursue the Yamal project.

The project was completed on time despite significant headwinds caused by U.S. sanctions, which have blocked technology transfer and made financing of the investment extremely difficult. But at the end, Novatek was able to secure both financing and technology transfer thanks to collaboration with France’s Total, China’s National Petroleum Corportation and China’s Silk Road Fund. But the project could not be successful if not for significant support from the Russian government, which extended a 12-year Mineral Extraction Tax holiday toward the project, subsidized part of construction activity, and exempted LNG from export taxes.

Yamal’s success stands in stark contrast to the failure of LNG projects planned by Russian national companies Gazprom and Rosneft.  As a result, Novatek has grown to Russia’s LNG leader—protected but not owned by the Russian government. This realization should give pause to Gazprom, particularly as it considers its position in Europe.

Similar to Sakhalin 2, Yamal LNG is focused on LNG delivery to Asia. However, due to Arctic conditions it is only able to do so directly during the summer months. Over the remaining part of the year, Yamal LNG will take a longer delivery route via Europe. Such availability of Yamal LNG in Europe over the cold period—when natural gas is particularly in demand—bodes well for the European market and EU’s push toward energy security and diversification of supply.

But this does not bode well for Gazprom’s position in Europe, as its list of competitors will expand from Norway, Qatar, and the U.S. to include also a Russian company. The pressure is even greater when one considers the pushback Gazprom has faced in Europe with respect to the company’s vertical structure and monopolistic practices,

The pushback institutionalized within the EU’s Third Energy Package has been visible on many levels, including: 1) difficulties to acquire a permit for a second set of pipelines (Nord Stream 2) that would bring more Russian gas under the Baltic Sea directly to Germany;  2) active litigation against Gazprom’s monopolistic practices, and 3) new infrastructure projects that involve new pipeline interconnectors and LNG import facilities that diversify European supply, .

All of the above make access to the European market increasingly difficult for Gazprom, but these conditions do help other natural gas suppliers, including Yamal LNG, which needs a winter home for its gas during the time when Artic temperatures limit direct delivery to Asia. As a result, Gazprom and Novatek may end up competing for the same market, which may undermine Gazprom’s market position, and potentially reduce Russia’s geopolitical influence in regions most dependent on Russian gas.

To sum up, Novatek’s Yamal LNG has been an undisputed accomplishment, but it is unclear whether it will have a net positive influence on Russia’s position in natural gas exports. It seems that Novatek’s gain can become Gazprom’s loss—if not Russia’s loss—in Europe and possibly beyond.

[summary] => [format] => full_html [safe_value] =>

On December 8, a first LNG cargo left Russia’s Yamal Peninsula. The event has been considered a great win not only by Yamal LNG shareholders but also by the Russian government, which sees the project as a first step to Russia’s becoming the world’s top LNG player. Yamal LNG was completed on time despite difficult Arctic conditions and technological and financial difficulties compounded by U.S. sanctions. But, as it often happens, the reality and the effects of Russia’s new endeavor are more nuanced.

To begin, Yamal LNG has not been the first Russian LNG facility. The first one—Sakhalin 2—has been operating since 2009, delivering LNG mainly to the Asia-Pacific region. The project has been managed by state-owned Gazprom, until recently, the only Russian company allowed to export natural gas.

In 2013, the Russian government allowed Russian companies other than Gazprom to export natural gas but only in the form of LNG while keeping Gazprom export monopoly in piped gas. The decision allowed Novatek, a private Russian company, to pursue the Yamal project.

The project was completed on time despite significant headwinds caused by U.S. sanctions, which have blocked technology transfer and made financing of the investment extremely difficult. But at the end, Novatek was able to secure both financing and technology transfer thanks to collaboration with France’s Total, China’s National Petroleum Corportation and China’s Silk Road Fund. But the project could not be successful if not for significant support from the Russian government, which extended a 12-year Mineral Extraction Tax holiday toward the project, subsidized part of construction activity, and exempted LNG from export taxes.

Yamal’s success stands in stark contrast to the failure of LNG projects planned by Russian national companies Gazprom and Rosneft.  As a result, Novatek has grown to Russia’s LNG leader—protected but not owned by the Russian government. This realization should give pause to Gazprom, particularly as it considers its position in Europe.

Similar to Sakhalin 2, Yamal LNG is focused on LNG delivery to Asia. However, due to Arctic conditions it is only able to do so directly during the summer months. Over the remaining part of the year, Yamal LNG will take a longer delivery route via Europe. Such availability of Yamal LNG in Europe over the cold period—when natural gas is particularly in demand—bodes well for the European market and EU’s push toward energy security and diversification of supply.

But this does not bode well for Gazprom’s position in Europe, as its list of competitors will expand from Norway, Qatar, and the U.S. to include also a Russian company. The pressure is even greater when one considers the pushback Gazprom has faced in Europe with respect to the company’s vertical structure and monopolistic practices,

The pushback institutionalized within the EU’s Third Energy Package has been visible on many levels, including: 1) difficulties to acquire a permit for a second set of pipelines (Nord Stream 2) that would bring more Russian gas under the Baltic Sea directly to Germany;  2) active litigation against Gazprom’s monopolistic practices, and 3) new infrastructure projects that involve new pipeline interconnectors and LNG import facilities that diversify European supply, .

All of the above make access to the European market increasingly difficult for Gazprom, but these conditions do help other natural gas suppliers, including Yamal LNG, which needs a winter home for its gas during the time when Artic temperatures limit direct delivery to Asia. As a result, Gazprom and Novatek may end up competing for the same market, which may undermine Gazprom’s market position, and potentially reduce Russia’s geopolitical influence in regions most dependent on Russian gas.

To sum up, Novatek’s Yamal LNG has been an undisputed accomplishment, but it is unclear whether it will have a net positive influence on Russia’s position in natural gas exports. It seems that Novatek’s gain can become Gazprom’s loss—if not Russia’s loss—in Europe and possibly beyond.

[safe_summary] => ) ) ) [taxonomy_wp_blog_tags] => Array ( ) [field_intro_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 2390 [uid] => 118 [filename] => 59e71f13fc7e93670a8b4567.jpg [uri] => public://59e71f13fc7e93670a8b4567.jpg [filemime] => image/jpeg [filesize] => 107658 [status] => 1 [timestamp] => 1515604279 [focus_rect] => [crop_rect] => [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 790 [height] => 444 ) ) ) [field_blog_author] => Array ( [und] => Array ( [0] => Array ( [value] => Anna Mikulska [format] => [safe_value] => Anna Mikulska ) ) ) [field_image_caption] => Array ( [und] => Array ( [0] => Array ( [value] => Photo via: RT.com [format] => [safe_value] => Photo via: RT.com ) ) ) [field_set_as_featured_] => Array ( [und] => Array ( [0] => Array ( [value] => no ) ) ) [field_authors] => Array ( [und] => Array ( [0] => Array ( [target_id] => 1741 ) ) ) [field_addthis] => Array ( [und] => Array ( [0] => Array ( [value] => Dummy value ) ) ) [field_teaser] => Array ( ) [field_primary_theme] => Array ( ) [field_secondary_themes] => Array ( ) [field_exclude] => Array ( ) [field_more_like_this] => Array ( ) [field_show_cropped_image] => Array ( [und] => Array ( [0] => Array ( [value] => 1 ) ) ) [metatags] => Array ( [und] => Array ( [article:published_time] => Array ( ) [article:modified_time] => Array ( ) ) ) [rdf_mapping] => Array ( [rdftype] => Array ( [0] => sioc:Item [1] => foaf:Document ) [title] => Array ( [predicates] => Array ( [0] => dc:title ) ) [created] => Array ( [predicates] => Array ( [0] => dc:date [1] => dc:created ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [changed] => Array ( [predicates] => Array ( [0] => dc:modified ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [body] => Array ( [predicates] => Array ( [0] => content:encoded ) ) [uid] => Array ( [predicates] => Array ( [0] => sioc:has_creator ) [type] => rel ) [name] => Array ( [predicates] => Array ( [0] => foaf:name ) ) [comment_count] => Array ( [predicates] => Array ( [0] => sioc:num_replies ) [datatype] => xsd:integer ) [last_activity] => Array ( [predicates] => Array ( [0] => sioc:last_activity_date ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) ) [path] => Array ( [pathauto] => 1 ) [cid] => 0 [last_comment_timestamp] => 1515604279 [last_comment_name] => [last_comment_uid] => 118 [comment_count] => 0 [name] => mollie [picture] => 0 [data] => b:0; ) [access] => 1 ) [#settings] => Array ( [display] => Array ( ) [field] => Array ( [target_type] => node [handler] => views [handler_settings] => Array ( [view] => Array ( [view_name] => more_like_this_picker [display_name] => entityreference_1 [args] => Array ( ) ) [behaviors] => Array ( [views-select-list] => Array ( [status] => 0 ) ) ) ) ) ) [1] => Array ( [#theme] => entityreference_entity_id [#item] => Array ( [target_id] => 3231 [entity] => stdClass Object ( [vid] => 4205 [uid] => 10 [title] => How U.S. LNG is Changing the Global Gas Market [log] => [status] => 1 [comment] => 1 [promote] => 0 [sticky] => 0 [nid] => 3231 [type] => podcast [language] => und [created] => 1488258000 [changed] => 1530890595 [tnid] => 0 [translate] => 0 [revision_timestamp] => 1530890595 [revision_uid] => 10 [body] => Array ( [und] => Array ( [0] => Array ( [value] =>

In 2016 the first shipment of U.S. liquefied natural gas left by tanker from a terminal on the Gulf coast.  In the year since, U.S. LNG has made its way to customers around the globe, increasing competition in the gas market and threatening to loosen the grip of some suppliers on captive markets.

Guest Anna Mikulska, Senior Fellow at the Kleinman Center for Energy Policy, talks about the globalization of the natural gas market, the competitiveness of U.S. exports and their implications for relationships abroad.

 

[summary] => [format] => full_html [safe_value] =>

In 2016 the first shipment of U.S. liquefied natural gas left by tanker from a terminal on the Gulf coast.  In the year since, U.S. LNG has made its way to customers around the globe, increasing competition in the gas market and threatening to loosen the grip of some suppliers on captive markets.

Guest Anna Mikulska, Senior Fellow at the Kleinman Center for Energy Policy, talks about the globalization of the natural gas market, the competitiveness of U.S. exports and their implications for relationships abroad.

 

[safe_summary] => ) ) ) [field_date] => Array ( [und] => Array ( [0] => Array ( [value] => 2017-02-28 00:00:00 [timezone] => America/New_York [timezone_db] => America/New_York [date_type] => datetime ) ) ) [field_episode] => Array ( [und] => Array ( [0] => Array ( [value] => EPN07 [format] => [safe_value] => EPN07 ) ) ) [field_episode_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 1673 [uid] => 10 [filename] => EPN 07 Square.jpg [uri] => public://epn_image/EPN 07 Square.jpg [filemime] => image/jpeg [filesize] => 162022 [status] => 1 [timestamp] => 1488221733 [focus_rect] => [crop_rect] => [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 500 [height] => 500 ) ) ) [field_player] => Array ( [und] => Array ( [0] => Array ( [value] => [format] => no_editor [safe_value] => ) ) ) [field_teaser] => Array ( [und] => Array ( [0] => Array ( [value] =>

U.S. natural gas exports are helping to globalize the gas market, putting traditional buyer-seller relationships to the test and raising the possibility of far-reaching geopolitical consequences.

[format] => full_html [safe_value] =>

U.S. natural gas exports are helping to globalize the gas market, putting traditional buyer-seller relationships to the test and raising the possibility of far-reaching geopolitical consequences.

) ) ) [field_top_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 1675 [uid] => 10 [filename] => arctic_princess-9271248-lng_tanker-ship-222.jpg [uri] => public://top_image/arctic_princess-9271248-lng_tanker-ship-222.jpg [filemime] => image/jpeg [filesize] => 1571110 [status] => 1 [timestamp] => 1488221733 [focus_rect] => 0,123,1800,642 [crop_rect] => 0,123,1800,642 [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 1800 [height] => 1350 ) ) ) [field_embed_small] => Array ( [und] => Array ( [0] => Array ( [value] => [format] => no_editor [safe_value] => ) ) ) [field_teaser_image] => Array ( [und] => Array ( [0] => Array ( [fid] => 1674 [uid] => 10 [filename] => arctic_princess-9271248-lng_tanker-ship-222.jpg [uri] => public://arctic_princess-9271248-lng_tanker-ship-222.jpg [filemime] => image/jpeg [filesize] => 356661 [status] => 1 [timestamp] => 1488221733 [focus_rect] => 190,0,429,428 [crop_rect] => 190,0,429,428 [rdf_mapping] => Array ( ) [alt] => [title] => [width] => 800 [height] => 600 ) ) ) [field_set_as_featured_] => Array ( ) [field_authors] => Array ( [und] => Array ( [0] => Array ( [target_id] => 1741 ) ) ) [field_addthis] => Array ( [und] => Array ( [0] => Array ( [value] => Dummy value ) ) ) [field_primary_theme] => Array ( [und] => Array ( [0] => Array ( [tid] => 203 ) ) ) [field_secondary_themes] => Array ( [und] => Array ( [0] => Array ( [tid] => 204 ) ) ) [field_exclude] => Array ( [und] => Array ( [0] => Array ( [value] => 0 ) ) ) [field_more_like_this] => Array ( [und] => Array ( [0] => Array ( [target_id] => 2380 ) [1] => Array ( [target_id] => 6148 ) [2] => Array ( [target_id] => 4612 ) ) ) [metatags] => Array ( [und] => Array ( [og:image] => Array ( [value] => public://top_image/arctic_princess-9271248-lng_tanker-ship-222.jpg ) [article:author] => Array ( ) [article:publisher] => Array ( ) [article:section] => Array ( ) [article:tag] => Array ( ) [article:published_time] => Array ( ) [article:modified_time] => Array ( ) [article:expiration_time] => Array ( ) [profile:first_name] => Array ( ) [profile:last_name] => Array ( ) [profile:username] => Array ( ) [profile:gender] => Array ( ) [book:author] => Array ( ) [book:isbn] => Array ( ) [book:release_date] => Array ( ) [book:tag] => Array ( ) [video:actor] => Array ( ) [video:actor:role] => Array ( ) [video:director] => Array ( ) [video:writer] => Array ( ) [video:duration] => Array ( ) [video:release_date] => Array ( ) [video:tag] => Array ( ) [video:series] => Array ( ) ) ) [rdf_mapping] => Array ( [rdftype] => Array ( [0] => sioc:Item [1] => foaf:Document ) [title] => Array ( [predicates] => Array ( [0] => dc:title ) ) [created] => Array ( [predicates] => Array ( [0] => dc:date [1] => dc:created ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [changed] => Array ( [predicates] => Array ( [0] => dc:modified ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) [body] => Array ( [predicates] => Array ( [0] => content:encoded ) ) [uid] => Array ( [predicates] => Array ( [0] => sioc:has_creator ) [type] => rel ) [name] => Array ( [predicates] => Array ( [0] => foaf:name ) ) [comment_count] => Array ( [predicates] => Array ( [0] => sioc:num_replies ) [datatype] => xsd:integer ) [last_activity] => Array ( [predicates] => Array ( [0] => sioc:last_activity_date ) [datatype] => xsd:dateTime [callback] => date_iso8601 ) ) [path] => Array ( [pathauto] => 1 ) [cid] => 0 [last_comment_timestamp] => 1488221733 [last_comment_name] => [last_comment_uid] => 10 [comment_count] => 0 [name] => bill [picture] => 0 [data] => b:0; ) [access] => 1 ) [#settings] => Array ( [display] => Array ( ) [field] => Array ( [target_type] => node [handler] => views [handler_settings] => Array ( [view] => Array ( [view_name] => more_like_this_picker [display_name] => entityreference_1 [args] => Array ( ) ) [behaviors] => Array ( [views-select-list] => Array ( [status] => 0 ) ) ) ) ) ) [#printed] => 1 ) [submitted_by] => Array ( [0] => Array ( ) [#weight] => 8 [#access] => ) )
Source: Sputnik International

Last week, in an effort to prevent a possible trade war over U.S. steel and aluminum tariffs, the President of the European Commission (EC) Jean-Claude Juncker met in Washington with U.S. President Donald Trump. They struck an agreement about Europe buying more U.S. LNG. But as noted by many analysts, neither side can really make this happen.

The agreement includes very few details: Juncker committed Europe to significantly increase their volume of U.S. LNG imports, while Trump agreed to send more. Yet neither person making the promises has much influence on fulfilling them. The LNG that originates from U.S. coasts does not belong to the U.S. government but to profit-seeking private companies. The U.S. government can encourage LNG production—by providing a hospitable regulatory and legal environment—but it cannot force companies to send products to a specific region or country.

On his part, Juncker represents the EU but is ultimately dependent on individual EU member decisions. The EU cannot force its members to import U.S. LNG, but it can motivate or make it possible through investment in and financing of LNG infrastructure.

Going further, analysts are not sure whether additional LNG importing capacity would ultimately attract U.S. LNG. Some point to the existing capacity that is currently underused, a result of inadequate LNG demand and LNG prices that are high in comparison to the piped Russian gas. In addition, there is the question of LNG competition from cheaper and/or more proximate producers such as Norway, Qatar or, most recently, Russia.

Today’s U.S. producers are lured to Asia, where higher prices provide higher profit margins. Thus, even if more terminals are built, it is not a given that these terminals will maximize capacity or draw LNG from the U.S.

In the meantime, Russia has noted record-level highs in natural gas delivery to Europe in 2016 and 2017. And new, more secure transport routes are being built (Nord Stream 2, Turkish Stream) to deliver the abundant and low-cost Russian gas to Europe.

But while Juncker’s promise of large U.S. LNG imports may never materialize, his commitment to building new LNG terminals may actually be an important part of the U.S.-EU natural gas and energy security strategy.

Strategically placed (see Figure 1), new terminals could impact Russian pipeline gas deliveries—if not in volume, then at least in price—while dulling the geopolitical benefits Russia is deriving from its dominant supplier position. My recent research with Gabriel Collins identifies in detail the elements needed to achieve this goal. In a nutshell, the EU must:

  1. Build terminals in areas that are currently highly dependent on Russian gas;
  2. Ramp up underutilized LNG import capacity—with pipelines and interconnectors that take gas into areas that lack gas diversity;
  3. Push harder for market-based rules to govern the natural gas market within EU member states, to encourage competition and spawn interest from U.S. LNG producers.

Figure 1. Priority Zones for Geoeconomic Gas Investments 

Source: Collins & Mikulska, 2018.

Would all this bring a rush of U.S. LNG onto the European shores?

Unlikely. U.S. LNG is expected to continue to flow to Asia, where prices and demand are advantageous for U.S. producers.

But as much or as little of the U.S. LNG that would actually reach Europe would not be inconsequential.

LNG infrastructure in Europe would provide ability for the U.S. LNG to feed into the market whenever price disruptions emerge. As such it would provide a price floor and protection from extraction of economic rents by a dominant supplier.

In addition, the deliveries would neutralize geopolitical influence Russia as such supplier has yielded (also a major win for the U.S.).  In economic terms, activating more LNG capacity and more potential demand, would be beneficial for U.S. LNG producers. Even if their products never reach European shores, European LNG demand it will impact the industry via displacement: non-U.S. LNG delivered to Europe makes space for U.S deliveries elsewhere, including China or India, for example.

Our blog highlights the research, opinions, and insights of individual authors. It does not represent the voice of the Kleinman Center.

More Like This

Blog Post | January 10, 2018 Yamal LNG – A Big Win for Russian Gas?
Blog Post | June 25, 2018 Natural Gas’ Methane Problem