Tags: Natural | gas | Russia | Europe

Energy Experts: US Natural Gas Exports Unlikely to Play Big Role in Europe

By    |   Tuesday, 18 Mar 2014 09:41 AM

Russia's intervention in the Ukraine has led some commentators to call for the United States to send gas exports to Ukraine and Western Europe to lessen their dependence on Russia.

But that's just not practical, several energy experts tell CNBC.

In contrast to Russia and Mideast oil-producing nations, private companies control the U.S. natural gas supply. So it is those companies, rather than the U.S. government, that determine where the gas goes, based on supply, demand and price.

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"Essentially the U.S. government cannot force that upon private-sector companies," Tim Boersma, an energy specialist at the Brookings Institution, tells CNBC.

"There are rare examples of the government forbidding companies to sell a product somewhere, e.g., Iran, but to sell somewhere for arguably a lower price than the company could get elsewhere" is unrealistic.

Approximately 80 percent of U.S. natural gas exports are slated for Asia during the next few years, according to CNBC.

William Frohnhoefer, managing director of research firm BTIG, tells CNBC that natural gas from the United States doesn't need to replace the full supply of Russia's natural gas to European countries.

"You don't need to replace it all, you need to show Russia [Ukraine] has alternatives," he contends.

"If Ukraine and other countries dependent on Russia can wean themselves away, they will be emboldened to seek other [natural gas] sources, and that would be the U.S.," he notes.

When it comes to Ukraine, there's another problem. "Ukraine doesn't have the ability to pay for this gas," Kartik Misra, senior analyst at Energy Intelligence, tells the news service.

Meanwhile, oil trader Daniel Dicker writes on The Huffington Post that "building an export terminal for LNG [liquefied natural gas] is expensive, costing $4 billion and four years to convert an already existing import terminal — as energy company Dominion Resources is doing at Cove Point, Md. — and more than $10 billion and 10 years to build from scratch."

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Russia's intervention in the Ukraine has led some commentators to call for the United States to send gas exports to Ukraine and Western Europe to lessen their dependence on Russia.
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2014-41-18
Tuesday, 18 Mar 2014 09:41 AM
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