March 29, 2024

MediaBizNet

Complete Australian News World

Why can't the United States quickly separate Europe from Russian gas

Why can’t the United States quickly separate Europe from Russian gas

Houston – President Biden He announced Friday that the United States will send more natural gas to Europe to help it collapse Its dependence on Russian energy. But this plan would be largely symbolic, at least in the short term, because the United States does not have the capacity to export more gas and Europe does not have the capacity to import significantly more.

In recent months, US exporters have already, encouraged by President Biden, have done just that Maximizing the output of plants that convert natural gas to liquid They are easily shipped on large carriers. They diverted shipments originally destined for Asia to Europe.

But energy experts said that the construction of enough plants on both sides of the Atlantic to expand significantly US exports of liquefied natural gas, or LNG, to Europe could take two to five years. This reality is likely to limit the scope of the natural gas supply announcement made by Biden and European Commission President, Ursula von der Leyen, on Friday.

“In the short term, there are really no good options, other than to beg an Asian buyer or two to give up their LNG tanker to Europe,” said Robert McNally, an energy adviser to former President George W. Bush. But he added that once enough gas stations were built, the United States could become an “energy arsenal” that helps Europe break its dependence on Russia.

Friday’s agreement, which calls for the United States to help the European Union secure an additional 15 billion cubic meters of LNG this year, It can also undermine Biden and European officials’ efforts to combat climate change. Once new import and export terminals are built, they will likely continue to operate for several decades, resulting in the continued use of fossil fuels for much longer than many environmentalists consider sustainable for the planet’s well-being.

For now, however, climate concerns appear to be easing as US and European leaders seek to punish Russian President Vladimir Putin for invading Ukraine with Depriving him of billions of dollars in energy sales.

The United States has already significantly increased energy exports to Europe. So far this year, nearly three-quarters of USLNGs have gone to Europe, up from 34 percent for the whole of 2021. With natural gas prices soaring in Europe, American companies have done everything they can to send more gas there. The Biden administration helped by urging buyers in Asian countries such as Japan and South Korea to abandon shipments of LNG so that it could be sent to Europe.

READ  Plane crash in Nepal: At least 68 killed as a Yeti Airlines plane crashes near Pokhara

The United States has a lot of natural gas, mostly in shale fields from Pennsylvania to the southwest. The gas comes out of the ground along with oil from the Permian Basin, which spans Texas and New Mexico, and producers there are gradually increasing their production of both oil and gas after cutting production dramatically in the first year of the pandemic, when energy prices collapsed.

But the biggest problem with sending more energy to Europe is that natural gas, unlike crude oil, cannot easily be placed on ocean-going ships. Gas must first be cooled in an expensive process at export terminals, mostly on the Gulf Coast. Then the liquid gas is poured into specialized tankers. When the ships reach their destination, the process is run in reverse to convert LNG back into gas.

A large plant to export or import can cost more than $1 billion, and planning, obtaining permits, and completing construction can take years. There are seven export terminals in the United States and 28 large-scale import terminals in Europe, which also obtain LNG from suppliers such as Qatar and Egypt.

Some European countries, including Germany, were until recently not interested in building LNG terminals because it was much cheaper to import gas via pipeline from Russia. Germany It is now reviving plans to build its first LNG import terminal on its northern coast.

“Europe’s need for gas far exceeds what the system can provide,” said Nikos Tsavos, an energy analyst at the Center for Strategic and International Studies in Washington. Diplomacy can only do so much.

But in the longer term, energy experts say, the United States can do much more to help Europe. Together with the European Union, Washington could provide loan guarantees for US export and European import terminals to cut costs and speed up construction. Governments can ask international lending institutions such as the World Bank and European Investment Bank to make natural gas plants, pipelines and processing facilities a priority. They could relax regulations that gas producers, pipeline builders and plant developers say have made building gas infrastructure more difficult or expensive.

READ  Shooting on the highway in the West Bank: At least one person was killed and several others were injured in shooting on the outskirts of Jerusalem

Sheriff Suki, CEO of Tellurian, a US gas producer that plans to build an export terminal in Louisiana, said he hopes the Biden administration will streamline permitting and environmental reviews “to make sure things happen quickly without managing everything.” He added that the government could encourage banks and investors, some of whom have recently shunned oil and gas projects in a bid to hone their climate credentials, to lend to projects like him.

“If all the major US banks and major institutions like BlackRock and Blackstone feel comfortable investing in hydrocarbons, and won’t be criticized, we will develop the $100 billion worth of infrastructure we need,” said Mr.

There are few export terminals under construction in the US and exports could increase by nearly a third by 2026. Nearly a dozen US export terminal projects have been approved by the Federal Energy Regulatory Commission but cannot move forward until it secures funding from investors and lenders.

“This is the bottleneck,” Tsavos said.

Roughly 10 European import terminals are being built or are in the planning stages in Italy, Belgium, Poland, Germany, Cyprus and Greece, but most of them still lack the required funding.

Russia supplies about 40 percent of Europe’s gas, and its largest customers tend to be located in eastern and central Europe. Some countries have built capacity to import LNG, but most are located in southern Europe, which are not well connected by pipelines to countries in the north and east.

READ  Protesting farmers increase pressure on the French government

A month into the war in Ukraine, Russian gas shipments to Europe have remained relatively stable, but that could change. Mr. Putin suggested on Wednesday that countries hostile to Russia should be required to do so Pay for its energy in rubles Instead of the euro or the dollar. This would force European companies to deal with Russian banks that have been sanctioned by Western governments.

There is some indication that European companies and individuals may reduce their use of natural gas in part because it has become so expensive. For example, Yara International, a major fertilizer manufacturer in Italy and France, said it would cut production due to Rising costs of raw materials such as natural gas.

While reducing demand may help, some climate scientists and activists worry that the Biden administration’s focus on building LNG plants could deal a severe blow to efforts to tackle global warming by encouraging the use of fossil fuels.

Clark Williams Deere, senior fellow at the Institute for Energy Economics and Financial Analysis, a research organization, said.

Jason E. Bordoff, founding dean of the Columbia University School of Climate and a former energy advisor to President Barack Obama, said the Biden administration could encourage more gas shipments to Europe while also promoting Cleaner alternatives like wind and solar energy.

“In the long term, US financing and diplomacy tools can help accelerate Europe’s transition to clean energy to inevitably reduce reliance on volatile hydrocarbons,” he said.

Some promoters of natural gas exports say the fuel could help Europe meet climate goals by replacing the use of coal in power plants. Burning coal releases more greenhouse gases than burning gas.

Gina McCarthy, Biden’s senior adviser on climate change, said Thursday that the administration intends to “balance” what she called a “short-term emergency reform” to help Europe tackle climate change.

“We cannot increase our dependence on fossil fuels,” Ms McCarthy told a group of renewable energy executives. “We clearly differentiate even in our talks with the European Union.”

Lisa Friedman Contributed to reporting from Washington.