Report

Energizing Europe

Energizing Europe

Taking time out from the saga of Jonathan Pollard and the collapsing Mideast peace talks, U.S. Secretary of State John Kerry on Wednesday, April 2, waded into Europe’s energy battle with Russia, promising U.S. assistance to help Europe find alternative sources of energy beyond Moscow’s control.            

Ever since the confrontation between Kiev and Moscow heated up late last year, and especially since Russia’s forcible annexation of the Crimean peninsula in February, European leaders have been fretting about their energy security and heavy reliance on supplies of Russian natural gas. Ukraine, in particular, has been hammered by Russia’s use of the energy weapon; on Tuesday, Russia jacked up by about 40 percent the price it charges for natural gas exported to Ukraine, and raised the specter of further price hikes that will put more stress on an already wobbly economy.

Kerry, speaking at a U.S.-European Union Energy Council summit in Brussels, said that the U.S. wants to help ensure that Europe is able to accelerate its long-overdue energy diversification.

"It really boils down to this: No nation should use energy to stymie a people’s aspirations. It should not be used as a weapon," Kerry said.

He stressed two big measures that could help Ukraine, in particular, get out from under Moscow’s thumb: Bringing new sources of gas from Central Asia and sending gas from Eastern Europe back into Ukraine to undercut Russian dominance. He also nodded to the role that future exports of natural gas from the United States could play in diversifying global energy markets.

Those overtures were backed up in a joint statement by a coterie of energy and foreign-policy heavyweights, including EU foreign affairs chief Catherine Ashton, EU Energy Commissioner Gunther Oettinger, and Daniel Poneman, the U.S. deputy secretary of energy, who often serves as the Energy Department’s point man on international energy issues.

Both Kerry and the joint statement also applauded Ukraine’s efforts to undertake painful domestic energy reforms, including raising the domestic price of gas by about 50 percent, in order to improve its finances and reduce dependence on Russia. Kerry called the measures "critical."

In the short term, getting alternative supplies of natural gas to Europe will be difficult. One key step Europe can take is to improve the physical energy links between countries, which often act as "energy islands" despite their membership in the 28-nation economic bloc.

"Everybody agrees we are much better off than in 2009 [the last time Russia shut off gas supplies to Europe], but we are still short of having the infrastructure for a truly integrated energy market in Europe," one Central European diplomat said in an interview.

Kerry said that the United States and the EU were working in "lock step" to speed up a reverse pipeline connection that could carry gas from Central Europe into Ukraine, especially from Slovakia. While much of the gas that could be sent from Europe back to Ukraine is still ultimately sourced in Russia, prevailing prices in Europe are cheaper than the new, punitive rates that Moscow charges Kiev.

The Central European diplomat said that achieving reverse flows on pipelines between Slovakia and Ukraine would be the biggest step, because existing pipelines from Poland and Hungary to Ukraine supply only small amounts of gas. Slovakia, in contrast, could pipe significant volumes of gas to Ukraine, or the equivalent of about 40 percent of Ukraine’s gas consumption. Technically, the pipelines appear ready, but political obstacles have thus far prevented full operation of the Slovak pipeline.

In the longer term, both the United States and the EU want to accelerate the development of alternative sources of gas. Kerry stressed the importance of the Southern Corridor, a collection of pipelines meant to bring gas from Central Asia, especially Azerbaijan, to southern Europe. One such conduit, the Trans-Adriatic Pipeline, is already under construction and could bring modest amounts of Azeri gas to Europe by 2018. Another big project, the Trans-Anatolian pipeline, could eventually bring significant amounts of Azeri and Turkmen gas to southern Europe by way of Turkey.

Ultimately, the United States and Europe are also interested in tapping the new bounty of U.S. natural-gas production, which can be liquefied and shipped to customers overseas. European diplomats from countries in Central and Eastern Europe have blitzed Washington in recent months pleading for the United States to fast-track plans to export gas.

"Our new capacities as a gas producer and the approval of seven export licenses is going to help supply gas to global markets, and we look forward to doing that starting in 2015," Kerry said. However, it will take years, and billions of dollars in investment, before the U.S. can ship meaningful amounts of natural gas overseas. Even then, higher prices in Asia would likely limit the amount of gas that lands in Europe.

Oddly, he erroneously said, echoing comments last week from President Barack Obama, that the United States could export more gas than Europe currently consumes.

"That simply cannot be right. Somebody has clearly made a mistake in arithmetic," said Andrew Holland, senior fellow for energy and climate at the American Security Project.

Even if the entirety of proposed U.S. LNG export terminals were approved and built, the United States could only supply about two-thirds of current European gas consumption.