Ukraine Crisis Played Role in Recent LNG Approval

Published Apr 25, 2014 2:19 PM by The Maritime Executive

The crisis in Ukraine and Russia played an "elevated" role in the most recent approval of a U.S. liquefied natural gas export project, and geopolitics will continue to influence decisions on how much LNG to export, U.S. Energy Secretary Ernest Moniz said on Friday.

Moniz made the remarks at the annual conference of the U.S. Export-Import Bank in Washington, on a panel with White House advisor John Podesta, Commerce Secretary Penny Pritzker and Agriculture Secretary Tom Vilsack.

The energy secretary said the escalating crisis was a key factor behind the Energy Department's approval last month of exports of liquefied natural gas (LNG) from a plant to be built in Oregon, the second such authorization this year.

The gap between the Oregon project approval and the previous one - Sempra's Cameron plant in Louisiana - was largely in line with the average interval of about eight weeks that has prevailed since Washington resumed issuing LNG export permits last summer.

But Moniz suggested that the brewing geopolitical crisis in Europe will play a direct role in future approvals, which some companies hope could speed up the process.

While the shipments from last month's Jordan Cove project in Oregon would not be directed at Europe, analysts and industry groups said any gas exports from the United States could help increase flexibility in gas markets.

The next project in line for approval is also in Oregon by Leucadia National Corp.

Moniz said the Ukraine-Russia crisis will weigh heavily at the upcoming G7 group of leading industrialized economies meeting of energy ministers to take place May 5-6 in Rome.

U.K. Energy Secretary Ed Davey said Britain would use that meeting to promote a global plan for developing alternative energy sources and supply networks to try to curb Russia's ability to wield its gas reserves as a geopolitical tool.

The G7 wants to prioritize energy security after Russia's annexation of the Ukrainian region of Crimea, and fears Moscow could cut off supplies to Ukraine if the dispute deepens.

Russia supplies around a third of Europe's gas, some 40 percent of which it ships through Ukraine.

While UK Prime Minister David Cameron has been calling for more fracking in Europe to provide a counterweight to the continent's reliance on Russia for natural gas, some countries like France and Bulgaria ban the practice.

Moniz told the audience at the Ex-Im Bank conference that this will be a central talking point at the G7 meeting.

"I've been having phone conversations and I would say cautiously there may be an openness to re-examining the fracking issue," he said. 

By Valerie Volcovici (C) Reuters 2014.