No, Washington Does Not Have a Nat Gas Weapon Against Moscow
After Russia’s invasion of Ukraine and its occupation of Crimea, many in the West wondered what could be done to oppose Moscow. To complicate matters, Europe depends on Russia for over thirty percent of its natural gas supply, and Moscow has used this leverage before to extract political concessions. Even now, Gazprom – the Russian gas behemoth — has threatened to cut exports to Ukraine should it fail to pay its gas debt. To many, the answer to the specter of Russian natural gas dominance is clear: unleash America’s natural gas abundance and displace Moscow.
This sentiment was crystalized in an op-ed penned by John Boehner in The Wall Street Journal last week, which called on President Obama and the Department of Energy to accelerate LNG export terminal approvals and open up America’s vast natural gas supplies to export. Boehner claimed that not only can the United States match Russia in the European energy marketplace, it has an obligation to do so. The question is whether or not this would work. Can American natural gas exports help shift the European balance of power? In short: no.
While there is an argument to be made that crude oil exports or even coal exports could immediately dampen Moscow’s regional clout, natural gas exports cannot tip the geopolitical energy scales in Washington’s favour anytime soon. Most of the natural gas that could potentially head for Europe is already committed in long-term supply contracts. The reasons for this are financial. Building an LNG export facility is a multi-billion dollar endeavor, and financiers want to be sure that future revenue is guaranteed, at least until the debts are paid off. This necessitates long-term contracts between LNG exporters and LNG import facilities at the other end. This means that even once American LNG exports are booming, little of that gas could be rerouted in a surge to offset Russian supply.