11 March 2014, News Wires – Calls intensified for the US to expedite approval of the liquefied natural gas exports making their way through regulators, as one US senator vowed to make those approvals a part of an economic assistance package to Ukraine.
Ambassadors from four Central European countries sent a letter to US Congressional leaders last week asking for lawmakers to do whatever they can to speed up LNG projects so the gas can get to market and weaken the influence of Russia over regional prices.
“Gas-to-gas competition in our region is a vital aspect of national security and a key US interest in the region,” ambassadors from Hungary, Poland, the Czech Republic and Slovakia wrote in the letter.
“The presence of US natural gas would be much welcome in Central and Eastern Europe, and Congressional action to expedite LNG exports to America’s allies would come at a critically important time for the region.”
Senator Tom Barrasso echoed those calls on Monday, saying he plans to introduce amendments to the economic assistance package to Ukraine that would require the White House to approve applications to export LNG to Europe.
“As long as Ukraine and our Nato allies are overly dependent on Russian gas, Vladimir Putin will be able to hold them and their economies hostage,” he said in a statement. “Congress should respond by giving Ukraine as well as our Nato allies an alternative supply of natural gas.”
The editorial board of the Wall Street Journal on Monday also called on President Barack Obama to “serve US strategic and economic interests by immediately approving every request” to build an LNG export terminal.
There are about 21 such projects either proposed or awaiting approval from either the Department of Energy, which grants export permits, and the Federal Energy Regulatory Commission, which approves construction.
European nations are nervous as tensions mount over Russia’s presence in the Crimea region of Ukraine. Eastern Europeans feel particularly vulnerable after the 2009 episode in which state-run Gazprom shut off gas supplies to Ukraine over price disputes, stanching the flow of the fuel to other nations along the pipeline.
On Sunday, British Foreign Secretary William Hague said European leaders were discussing buying more gas from the US to diversify suppliers.
Despite the push to make more US gas available to customers in Europe, there is no guarantee that US sources would find their way to the continent. Asia is the presumed destination of most of the first promised loads – available no earlier than late next year – as buyers in Japan, South Korea and India have signed up for the bulk of already contracted gas.
Gas prices in Asia are typically higher than in Europe as well.
According to Reuters, US exports to Europe would barely break even at current spot market prices due to added costs for operations and shipping that would push the price of US cargoes higher than European spot levels.
If Gazprom lowered its gas prices by swamping the market, or prices in the US rose even slightly, North American LNG would no longer be competitive in European markets, the news wire reported.
European spot gas prices currently stand at around $10 per million British thermal unit; Asia usually pays at least $15 per MMBtu. US prices are hovering around $5 per MMBtu, but are forecast to go higher over time, while prices in Europe are expected to fall.
“Lower European prices could make U.S. LNG profitable for the Asian market alone,” Thierry Bros, senior gas analyst at Societe Generale, told Reuters.