March 2, 2015

PUTIN WON’T BE PLEASED: Is American LNG Ready to Help Europe?

When Russia threatened to cut off gas to Ukraine last year, policymakers on both sides of the Atlantic began to call for American gas producers to start exporting some of the enormous new quantities of shale gas to Europe as a way to help allies reduce dependence on Gazprom. At the time we pointed out two flaws in that strategy: first, constructing the requisite infrastructure on both ends of the supply chain takes years, so this would be no quick fix; and second, Europe would only receive American LNG if it outbid Asia, which at the time was ponying up a great deal.

That latter reasoning no longer holds, which changes the calculus somewhat. Already Europe is on track to double its LNG imports this year, though it’s still not sourcing that from America. That’s because the American LNG export infrastructure is still under construction. Just a few short years ago we were building import terminals; turning that completely around is neither cheap nor easy, and it won’t happen overnight.

Still, if Asian demand remains slack, Europe’s medium-term energy future looks brighter. Diversifying away from Putin’s gas supplies is obviously a top priority there, and American gas can help.

The more energy America produces — and exports — the more it hurts our various enemies around the world.

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