Inherency 15 Inherency Energy Dept Blocking 16
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- UX – Russian Nat Gas High
- Russia Currently Focusing on Expansionism
UX – Act FastUS needs to act fast – Russia-China deal and a lack of existing infrastructure give a short windowMartin 14 Richard, 5/30, Forbes, “Russia-China Gas Deal Narrows Window for U.S. Exports” http://www.forbes.com/sites/pikeresearch/2014/05/30/russia-china-gas-deal-narrows-window-for-u-s-exports/ Russia and China’s grand bargain on energy, a 30-year, $400 billion deal to pipe natural gas from Russia’s Far East to China, has prompted much commentary on the agreement’s potential to reshape global energy markets and tilt the balance of influence in Ukraine and, more broadly, in Europe. The deal has “upped the ante for Europeans to diversify their gas imports away from Russia,” said Erica Downs of the Brookings Institution; it means producers of liquefied natural gas (LNG) “may face more competitive markets in Japan and South Korea, which together bought more than half of the world’s supply in 2013,” wrote Chou Hui Hong, a Singapore-based reporter for Bloomberg News; “the implications are potentially huge for Russia, for China and much of Asia, and also for Europe,” declared Keith Johnson, covering all the bases in Foreign Policy. All the bases, that is, except one: the United States. The shale gas revolution in the States has led natural gas producers to envision an export boom in which U.S. companies become key suppliers to East Asia while countering Russian influence by shipping large amounts of LNG to Europe. President Obama said in 2012 that the U.S. is becoming “the Saudia Arabia of natural gas.” Better Hurry Indeed, U.S. petroleum exports reached 3.5 million barrels a day in 2013, roughly double the level of 5 years ago, according to the Energy Information Administration. Proponents of increased LNG exports argue that the gas export boom will bring in billions in profits for American companies, create thousands of high-paying jobs, and reduce the influence of undesirable LNG suppliers, i.e., Vladimir Putin’s Russia. All of that is, potentially, true. But there are signals that, even before the Russo-Chinese gas deal, natural gas advocates were overstating the potential market. And with China building pipelines to ship LNG across Central Asia, the market opportunity is dwindling fast. The United States has been slow off the mark in building export capacity. Thirty-one applications for LNG export licenses have been approved since 2011; only seven have been approved, six conditionally. In 2012, on assignment for Fortune, I visited the Sabine Pass natural gas terminal on Texas’ Gulf Coast. Built by Cheniere Energy LNG -0.06% in the 2000s as an import facility, the port had been retooled to load LNG on big tankers for export to Europe and Asia. Cheniere is the only producer that has won full DOE approval to export gas; and the window for an export boom may already be closing. UX – Russian Nat Gas HighRussia dominates the European market, pricing disagreements give the US leverage to competeEbinger 12 Senior fellow and Director of the Energy Security Initiative at Brookings, Charles, “Liquid Markets: Assessing the Case for US Exports of Liquefied Natural Gas,” 5-2-12, http://www.brookings.edu/~/media/events/2012/5/02%20lng%20exports/20120502_lng_exports European natural gas imports are dominated by the sale of Russian gas to European consumers at high, oil-indexed prices. Despite declines in Russia’s two largest natural gas fields (Urengoy and Yamburg), its natural gas production is pro- jected to increase by roughly one-third between 2010 and 2035.69 According to the International Energy Agency, exports from Russia will increase by roughly 67 percent over the same period, with much of the growth coming from increased pipeline and LNG exports to Asia.70 Norway is also a major supplier of natural gas to Europe and its production is projected to increase over the next two decades before reaching a plateau.71 However, this will not compensate for the precipi- tous decline in domestic production in the U.K. and the Netherlands, two historically substantial producers of natural gas.72 As a result, for the near future it appears that the reliance on natural gas from Russia will contin- ue—a trend underlined by the commissioning of the Nord Stream pipeline, the first pipeline that directly connects Russia with the EU. Russia ac- counts for about 31 percent of Europe’s natural gas imports.73 While it is clear that the gas relation- ship between Russia and European consumers will continue, the pricing relationship between the two parties will determine how much gas will be imported, and whether or not there will be an op- portunity for U.S. LNG exports. Historically, most Russian gas exports to Europe are underpinned by long-term contracts with gas sold at oil-indexed prices. However, with new LNG cargoes previ- ously destined for the U.S. now available on the global market, there has been an increase in spot- market trading of gas—with consumers in some cases finding it more economic to pay penalties for non-receipt of contract gas and to buy alternate supplies via LNG. The result has been increased pressure on the price of Russian gas exports and in- creased market power on the part of consumers to renegotiate oil-indexed contracts with Gazprom, the Russian state-owned gas company. Gazprom has agreed to renegotiate some contracts with its customers, primarily in Germany; however it has a number of arbitration cases under review and appears reluctant to renegotiate the terms for a large number of its contracts. Moreover, given Germany’s recent decision to accelerate the phase out of its existing fleet of nuclear reactors, there is a strong likelihood that much of the resultant elec- tricity shortage will be made up through increased natural gas consumption, thereby supporting demand and gas prices (for more on the foreign policy implications of potential U.S. LNG exports into Europe, see Part II). Russia Currently Focusing on ExpansionismOrescovic,14 [As a researcher at Harvard University, Luka has conducted research in Russia, Central and Eastern Europe with Harvard University’s Government and History Departments and Center for European Studies., “Russia’s Next Offensive; Securing Global Gas Dominance”, 3/20/14, http://www.huffingtonpost.com/luka-oreskovic/russias-next-offensive-en_b_4996252.html-EW] Even before the current crisis in Ukraine, Europe has been trying to wean itself off dependence on Russian gas. And in turn, Russia has been trying to wean itself off dependence on the European gas market. While Europe is adding terminals to import more liquefied natural gas (LNG), initially from Qatar and likely eventually the United States, discussing exploratory efforts for shale gas and turning to the cheaper coal to fuel its power stations, Russia is finally taking a more pragmatic approach to Gazprom, the state-controlled and long protected gas giant. Instead of further empowering Gazprom, as he has in the past, Russian President Vladimir Putin signed a law liberalizing LNG exports at the end of November 2013. The law allows projects that hold an upstream license and use gas for LNG production to qualify for LNG export rights. Given that Gazprom's rivals in the LNG space, Novatek and Rosneft, own projects that meet these qualifications, Russia is signaling a diversification strategy. Novatek's 80 percent owned Yamal LNG project is the most advanced new LNG project in Russia, and qualifies to export LNG under the new liberalization law. Rosneft's LNG projects also qualify, including its joint-venture with ExxonMobil on Sakhalin Island. And Gazprom remains in the game with its own Sakhalin LNG and Vladivostok LNG projects. With more players competing in the LNG export game, Russia is improving its chance of ensuring gas dominance, especially as these companies look East. Keys to Russia's diversification beyond Europe, these projects allow Russia to establish a further presence in Asia without having to agree upon or invest in additional pipelines with China. Instead, LNG offers Russia flexibility in terms of to whom to sell -- including likely China, Japan and South Korea -- and flexibility of implementation through expanding existing facilities or building new ones. Although the Russian players are not alone in vying for the Asian markets, Russia's geographic proximity, and therefore lower transportation costs, can potentially serve a substantial advantage. Not to mention other ties, such as China's China National Petroleum Corporation (CNPC) agreeing to purchase 20 percent of Novatek's Yamal LNG stake. 78 percent of the Yamal LNG project's output has already been committed under long-term contracts, with most of the volume to be supplied to Asia. An established presence in the Asia-Pacific gas market will undoubtedly boost Russia's global gas share. And by allowing Rosneft and Novatek to also play a role in Asia, Gazprom can continue focusing on pipeline exports, both to Asia and Europe. In Asia, to substantially increase gas exports, Russia requires a two-pronged approach: LNG and pipeline gas. Anton Safronov, a Paris-based LNG expert says that as "part of the latter strategy, Gazprom is working to sign a major deal with China National Petroleum Corporation (CNPC) this summer to supply gas through the planned Power of Siberia pipeline. The deal would see the state-owned major supply 38 Bcm per annum to China -- a significant step towards diversifying its customer base, especially as Europe tries to reduce its dependence on Russian gas." And in Europe, although Russia does not want to be dependent on Europe, it is also not willing to forgo a market that currently receives a third of its gas from Gazprom. The discussion is around diversification, not a complete shift. The crisis in Ukraine has only highlighted the need for both Europe and Russia to diversify beyond Gazprom's gas exports to Europe. Both parties will continue to need each other, especially in the short to medium terms. But for Russia to ensure global gas dominance, it will have to rely on Gazprom's Russian competitors, specifically in LNG for Asia. This is Putin's next offensive. Directory: file -> view view -> Western Europe after wwii view -> Author study: paul fleischman view -> Qpa1 7ela study Guide view -> Arctic Oil/Gas Neg view -> November 1970 Approximately 150,000-500,000 deaths Bhola Cyclone Bangladesh view -> Grade Level: 6 Unit of Study: Caribbean glce view -> Citation: Duffield, Katy view -> Table of Contents Lesson # view -> Chinese Wind Energy Disad Download 0.9 Mb. Share with your friends:
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