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The Warsaw Voice » Business » June 29, 2015
Central Europe Energy Partners
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Transatlantic LNG Trade: Greater Fuel Diversity and Energy Security in Europe
June 29, 2015   
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While Europe is aiming to hedge itself against potential undersupplies of natural gas, the United States can already produce more of this resource than it needs domestically. Both sides could greatly benefit from facilitating the transatlantic trade of liquefied natural gas (LNG). This is one of the main conclusions of the first Europe-U.S. LNG Roundtable, which took place in Brussels May 27-28.

The United States has moved from a position of energy scarcity to one of energy abundance. This made the debate at the Europe-U.S. LNG Roundtable timely and important, not least because of the ongoing negotiations on the Transatlantic Trade and Investment Partnership (TTIP). It is believed that the transatlantic trade agreement may work as a stimulus toward lifting an export ban on U.S. crude oil and natural gas.

As impediments to commercial agreements need to be addressed through legislative and administrative action, the roundtable served as a high-level summit for decision-makers and industry representatives from both sides of the Atlantic to discuss the potential benefits of free trade and a more open energy market.

According to Fred H. Hutchison, Executive Director of LNG Allies, a nonprofit research and advocacy organization that lobbies Washington to allow Eastern European nations heavily dependent on Russia for their energy supplies easier access to natural gas from the United States, the Europe-U.S. LNG Roundtable took place at a unique moment in history. Many European nations are looking to diversify energy sources and enhance their energy security, while U.S. producers are seeking new markets for expanded American oil and gas resources, Hutchison said. “LNG terminals for export and import have been built, and additional facilities are under construction. In short, buyers and sellers are ready to make a deal, creating a classic win-win situation with economic and geostrategic benefits on both sides of the Atlantic,” he added.

The Energy Union strategy, introduced by the European Commission Feb. 25, includes actions “to explore the full potential of LNG” storage and supply, focusing on the development of the internal market and increasing interconnectivity. This proves that LNG is seen in the EU as a key alternative for securing stable and competitively priced supplies of gas. However, there is no common framework in place for an EU-wide LNG strategy at the moment. None of the existing LNG import terminals is in a position to fully serve the vulnerable flanks of Europe, which, in particular, need energy supply diversification. Speakers at the roundtable underlined the need to develop the EU’s LNG receiving and gas pipeline infrastructure.

Paweł Olechnowicz, Chairman of the Board of Directors of Central Europe Energy Partners, an international non-profit association based in Brussels that represents the interests of energy and energy-intensive companies from Central Europe, said, “Energy security is a worldwide challenge, as we are all dependent on each other on global markets. That is why we need to steadily enhance the infrastructure necessary to provide greater energy diversification and security. At Central Europe Energy Partners, we strongly advocate a holistic approach to this issue. We believe that the key to the EU’s energy security is the North-South Corridor of pipelines and interconnectors bringing together new and existing LNG terminals. This would integrate the still largely separate economies between the Baltic, Adriatic and Black Seas, allowing gas and other resources to flow freely wherever needed.”

Natural gas is widely recognized as the world’s cleanest-burning fossil fuel. It is transformed to liquid in minus 160 degrees Celsius. In this form it is 600 times more compressed, in terms of volume, than originally, which makes it more economical to store or ship long distances. The portion of the world’s gas supply provided by LNG is still considerably lower than that transported by pipelines. It accounts for around 10 percent of all natural gas consumed worldwide. But this share is growing fast as new projects start to add volume to supply as new markets open up. In 2014, LNG deliveries were estimated at 243 million metric tons, an increase of 3.5 million tons, or 1.5 percent, over 2013.

Tomasz Troniewski, Executive Director of A.T. Kearney, a global management consulting firm, said, “At A.T. Kearney, we aim to engage in projects that create lasting benefits for the societies in which we live. We perceive that taking part in initiatives enabling an expanded transatlantic trade in LNG definitely fits into that pattern. The shale gas revolution increased the accessibility of affordable fuel, and LNG technology allows the shipment of this fuel over long distances. Although American and European gas markets are very different, we see it as an opportunity that we should try to pursue on both sides on the Atlantic, and strongly believe that it could be beneficial for Europe and America.”

The transatlantic roundtable on LNG was organized by LNG Allies, Central Europe Energy Partners and A.T. Kearney. It aimed to provide a forum for U.S. exporters and upstream natural gas producers to meet potential customers from Europe. Speakers included key members of the U.S. Congress, U.S. government officials, EU Commissioners, members of the European Parliament, and representatives from energy companies from the United States and the EU. The first part of the event was held at the European Parliament and was co-hosted by Jerzy Buzek, Chairman of the Committee on Industry, Research, and Energy; and Bernd Lange, Chairman of the Committee on International Trade.
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