Appearing before the House Foreign Affairs Committee, Kerry was asked by committee chairman Rep. Ed Royce (R-Calif.) about allowing the export of LNG to Ukraine, a step Royce said would “send a powerful signal” to Russia and create American jobs.
“We’re all for it,” Kerry replied, pointing out that the DoE has issued six licenses for LNG terminals to export a total of 8.5 billion cubic feet a day – although he added that the first project would only start operating in 2015.
With winter coming to an end, Kerry said Ukraine should be able to weather the situation “if there is any manipulation of gas with respect to leverage by Russia.”
“And in the long run we’re prepared, and I hope others will be prepared, to help shift the current energy dependency.”
Royce welcomed that, but noted that the six government approvals to date had come over a three-year period.
“And it’s only six. I think there’s 24 pending, so anything that could be done to accelerate that and actually open that up for Ukraine and Eastern Europe would be, I think, very helpful.”
Royce earlier acknowledged that actual LNG exports would not be able to take place for some time yet, but argued that a message could still be sent to Russia now.
“It might take time, but once we made that signal, investors would then put up the terminals necessary for us to do it and it would go into the calculus in Moscow about whether or not they wanted to lose that position, and it might bring them to the table.”
Europe depends on Russia for more than a third of its natural gas needs, and much of it flows by pipeline via Ukraine. Critics have accused Russia for years of using its energy resources for political leverage, with prices hiked or supplies cut during disputes.
That dependency has been cited as a key reason why countries like Germany have been so reluctant to affront Russia over contentious issues like putting Ukraine and Georgia on a path to NATO membership.
Just last week Russia’s state-owned company Gazprom threatened to cut supplies to Ukraine over unpaid gas bills.
A resolution passed by the House earlier this week condemning Russia’s military intervention in Ukraine’s Crimea region said that Russia “has used and is continuing to use coercive economic measures, including the manipulation of energy prices and supplies, and trade restrictions to place political pressure on Ukraine and other countries in the region.”
The resolution voiced support for Ukraine’s efforts to achieve energy independence from Russia, and called on the U.S. “to promote increased natural gas exports.”
Advanced drilling techniques including hydraulic fracturing have pushed natural gas production in the U.S. to record levels in recent years, prompting a surge of requests for federal permits to export to overseas markets. Six licenses have been granted since 2011, the most recent for a terminal on Louisiana’s Gulf Coast, approved last month.
Other projects awaiting approval could raise the total output from the 8.5 billion cubic feet a day cited by Kerry to some 29 billion cubic feet a day, once all are up and running.
Offering choices ‘diminishes Russian power’
Proponents of LNG exports argue that even if it takes several years before LNG carriers begin shipping U.S. gas abroad, sending a strong message now could affect the calculations of leaders like President Vladimir Putin.
“Given the five to seven years that approving, engineering, permitting, and constructing a new LNG terminal takes, lifting gas export restrictions might not have a near-term and direct impact on the Ukraine crisis,” Heritage Foundation scholars Jack Spencer and Nicolas Loris wrote Thursday.
“However, doing so would send an important signal to Russia and the rest of the world. It would show any leader from any country that derives power from controlling energy interests that such strategies will no longer be effective.”
“Opening markets would provide a diversity of suppliers and greater energy supplies for the global market. This would likely result in lower prices and will certainly mean more choice for countries like Ukraine in the not so distant future,” Spencer and Loris said.
“Ultimately, providing that choice would be what diminishes Russian power.”
Last week four Eastern European nations formerly in the Soviet sphere said in a letter to congressional leaders that the “presence of U.S. natural gas would be much welcome in Central and Eastern Europe.”
The Hungarian, Polish, Slovakian and Czech governments called “existing bureaucratic hurdles” for export licenses to countries like theirs “a major hurdle.”
“Energy security is not only a day-to-day issue for millions of citizens in our region, but it is one of the most important security challenges that America’s allies face in Central and Eastern Europe today,” said the letter, signed by the four countries’ ambassadors and sent to House Speaker John Boehner and Senate Majority Leader Harry Reid.
In a statement in response, Boehner said, “I hope President Obama will heed this call from our allies to use his ‘pen and phone’ to direct the Secretary of Energy to immediately approve pending natural gas export requests and do everything possible to use American energy to reduce the dependency on Russia for our friends in Europe and around the globe.”