Why US Building its Energy Export?

By M. Tahir Khan.

Last month news has emerged from International magazines and papers that United States of America has initiated the process of exporting Natural Gas after many decades. The first of its export shipment carrying 100,000 ton tanker was shipped to Brazil and marked the entry of US in list of countries exporting Natural Gas.

Multiple questions arise here;

Why there is a thought process in US to work out on energy export?

Who forced US to initiate export of Natural Gas?

Is it Russian President Vladimir Putin who forced US & Allies to re think their export policy of Energy? Or

US want to free European allies from their complete dependence on Russian Gas?

European Union’s total reliance on Russian Energy came into lime light when Ukrainian territory of Crimea was annexed by Russia on 18th March, 2014. The annexation of Crimea took place in the aftermath of Ukrainian revolution, happened after wide range of unrest in the country in the start of January, 2014 and resulting in the change of regime in Ukraine.

US and European Union imposed limited sanctions on Russian Federation on its actions in Crimea and its annexation. However, European Union’s complete reliance on Energy needs from Russia, strengthened the Russia’s hard and bold steps, whereas EU Countries had to stay at the back foot and were not able to fully enforce its restrictions on Russia. This is the point, where all world powers especially US and its European allies started to re think on Europe’s heavy reliance on Russia’s energy to meet their domestic consumption. Russia being the largest natural gas supplier to Europe fills the 32.6% needs of Europe’s crude oil and 100.7 million tons of oil equivalents of natural gas, which equivalent of 38.7% total gas needs.

Russia has developed a huge supply lines of natural gas to Europe via twelve different gas pipe lines and these gas pipelines serve the needs of Germany, Italy, France, Belgium, Romania, Croatia, Poland, Austria, Finland, Estonia, Latcia and dozen of other countries as well. The largest importers of Russian gas in Europe include Germany and Italy accounting almost half of European Union gas. European dependence on Russian natural gas resources started in early 1980s, and no one imagined that after 35 years, Russian gas exports were to be used as a National Security tool in the hands of Vladimir Putin, and he managed to use it very conveniently during the annexation of Crimea. Vladimir Putin not only used it as security weapon also easily escaped from all trouble with any special damage.

Now within one year of Annexation of Crimea, United States has entered to into energy export business, although in earlier decades US remained a large importer of Natural Gas. If we look into details published by US Energy Information Administration, we can realize that in May, 2015 US gas imports dipped to its lowest level since 2014. The natural production has reached to its new heights during shale gas boom, and reduced the import of gas, however this import can be reduced up to one extent as nearly 98% of US imports came from Canada, which is 7% of total natural gas US consumption, which fell down last year from 11%.

US Energy Export

However, increase in natural gas production meets the needs of Mexico from Texas, Arizona and California pipelines which largely meet the requirements of Mexico plants. Now after 28 years, US have started to export natural gas, and desire to become world’s largest exporter of LNG along with Australia and Qatar. As reported in Foreign Policy Magazine, US Secretary of State Jhon Kerry along with other lawmakers and thinks tanks worked to use US LNG to reduce the reliance of Russian Natural gas being provided to European nations via a well established links of pipelines which built over a time spane of three and half decades. Therefore, US energy exports has increased world options to get cheap energy, it will reduce the dominance of some countries like Iran, Qatar and Russia, but in large it will not be able dominate Moscow’s energy supply to Europe. In most of the European countries there are less terminal facilities to import LNG, therefore reliance on Russian energy sources cannot be minimised and it will remain Russia’s national security tool for many years to come as well.

What else is important here, US stepping into oil and natural gas export also resulted into low fuel prices in world markets, which will now remain low in result of increased exports over the next couple of years. Furthermore, Iranian oil and gas resources after the removal of US and UN restrictions will also flood into market, and the world will enjoy cheap energy sources for some years.

 

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