US LNG Cannot Compete Under Any Circumstances With Russia’s Piped Gas – Prof
US Senators Chris Murphy and Ron Johnson introduced a bill aimed at combating what they called “malign Russian influence” in the EU and ensure European energy security. Speaking to Radio Sputnik, Dr. Mamdouh Salameh, international oil economist and professor of energy economics at the ESCP Europe Business School, shared his views on the issue.
Sputnik: In your view, how likely is the US Senate to pass this proposed European Energy Security and Diversification Act?
Mamdouh Salameh: Given the growing anti-Russian atmosphere in the United States Congress and the United States’ attempts to challenge Russia’s emergence as the energy super power of the world and also given US self-interest and Russia’s dominance in the gas market in the European Union, there is a reasonable probability that the proposed European Energy Security and Diversification Act will be approved by the US Senate.
Sputnik: How economically sound is this really? You’ve mentioned a lot of political reasons for wanting to pass this — is it an economically sound move to pass this kind of thing?
Mamdouh Salameh: Well, the proposed legislation is purely self-interest on the part of the United States, to help itself rather than help the European Union to diversify its energy sources. The United States wants to replace Russian piped natural gas to the European Union with the United States’ LNG (liquefied natural gas) exports. Despite the EU’s attempts to diversify energy sources, primarily natural gas, including the Southern Gas Corridor, which will bring gas [of] 10 billion cubic meters annually of Caspian gas from Azerbaijan to Turkey and the EU, it will still be a fraction of Russian supplies amounting currently to 224 billion cubic meters annually, or almost 40 percent of total EU demand. And it is on the rise. To add salt to injury, the Southern Gas Corridor will end up transmitting Russian gas to the EU through Turkish Stream. So, for Russia it is a win-win situation. Russia’s grip on the European Union gas supplies will continue well into the future despite the United States’ attempts, supported by the likes of Poland, the Baltic States, Georgia and Ukraine to undermine Russia’s supplies to the European Union.
Sputnik: Let’s talk about the economics of the gas supply. How competitive is the US LNG against prices that can be presented by Russian gas?
Mamdouh Salameh: US LNG cannot compete under any circumstances with Russian piped gas to Europe. Russia has a fully integrated gas industry underpinned by the world’s second largest proven reserves of natural gas, the cheapest production costs, does not have to convert its gas to LNG to ship it to Europe and already has a monopoly on export pipelines to Europe — even without Nord Stream 2. Russia provides roughly 40 percent of Europe’s gas needs and that dominance will continue well into the future.