Russia’s Stranglehold On Europe

President Trump is absolutely right when he calls on Europe to end their dependence on Russian natural gas because it gives Russia huge political leverage. It really does, and Russia exploits that leverage to the maximum.

Commercial interests are building a new pipeline, Nord Stream 2 to Europe to expand that leverage. Europe, specifically the E. U. Nations, import 40% of their natural gas from Russia, and Germany imports more than 50%.

Europe can get really cold in the Winter and threats to throttle natural gas can get political attention, quickly.

The US is the world’s largest producer of natural gas, and has developed two ports for export of the gas in liquified form…one in Louisiana and one in Maryland. We will more than double our ports this year.

Unfortunately, we are not price competitive because Russia has long established pipelines and can sell for about half of our price, $4.5 to $5.5 per million BTU compared to $7 for US LNG. We can sell more easily to a power hungry China, at least until Europe builds more LNG receiving ports. Germany, recognizing its dependence on Russia, is building such a port to diversify.

The US is new to this game, only exporting natural gas since 2015. Qatar is Second tonRussia in exports.

The E.U. has agreed to import more US natural gas in the meeting this week between Juncker, Head of the E.U. and Trump, but actually it was just a Letter of Intent, not a contract.

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