One of President Trump’s major points at the July 11, 2018 NATO meeting was that Germany is enriching Russia and making itself beholden to Russia by relying on Russian natural gas for most of its power production. He’s right. But the United States could be in a position to help Europe ween itself off of Russian energy, if the U.S. could improve its natural gas transportation and export infrastructure.
In 2009, Russia now supplied Germany with about 40% of its natural gas needs. Now, Russia is responsible for over half of Germany’s natural gas supply. In 2017 Germany imported over $21 billion in natural gas from Gazprom. Germany’s reliance on Russia to keep the lights on has only increased since Germany decided to phase out most of its nuclear power plants after the Fukushima nuclear power plant meltdown in 2011. The ties between Germany and Russia also became close when former German Chancellor Gerhard Schröder got involved with Russian state controlled energy companies Gazprom and Rosneft.
In 2017, Schröder was appointed chairman of Rosneft. By that point he had already served as chair of the Gazprom-dominated Nord Stream consortium. This group runs the Nord Stream pipeline that feeds Russian natural gas into Europe, and, of course, Germany, via the Baltic Sea. Nord Stream is in the process of negotiating with the EU to build a second pipeline, Nord Stream II, to deliver even more Russian natural gas to European power companies. Germany is a major proponent of Nord Stream II, which, if built, would make it effectively impossible for European countries to diversify their sources of energy away from Russian natural gas. When it comes down to it, Germany has not only enslaved itself to Russia’s natural gas empire , but its insistence on the new pipeline will drag much of the rest of Europe into the same situation. With the new pipeline, Russian gas would be so cheap that no other source would be competitive.
Many European countries want to reduce their dependence on Russian natural gas, not increase it. They are looking to import natural gas from other sources and have built re-gassification terminals to import liquefied natural gas from elsewhere. The United States is in an excellent position to provide liquified natural gas to Europe, except that U.S. infrastructure and transportation facilities are not designed to handle the amount of natural gas Europeans need to get out from under the yoke of Russian supply.
The U.S. is a major producer of natural gas. Fracking in areas like the Marcellus shale region have produced a glut of natural gas on the east coast of the United States. Natural gas is also produced as a byproduct of fracking in shale oil regions like the Permian Basin in Texas. This gas is collected in pipelines and used in power plants and as feedstock in petrochemical plants. It can also be liquefied and exported, but lengthy permitting processes have made building liquefaction plants difficult. Moreover, waivers from the federal government are needed to export liquified natural gas to many of the most profitable markets–such as much of Asia–and these waivers have not been easy to obtain. Currently, the United States has only two liquefaction plants that can export natural gas to any country in the world – Cheniere Energy’s Sabine Pass in Louisiana and Cove Point in Maryland. Both were opened in the last two years.
In addition to liquefaction facilities, the U.S. needs more natural gas pipelines to transport the gas within the U.S. before it is loaded on tankers (in liquid form) for export. If the U.S.commits to expediting the permitting and waiver process to build infrastructure now, perhaps it could convince Europe to buy its natural gas from North America instead of Russia.