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International Last Updated: May 24, 2018 - 1:36:40 PM


US gas lobby chief: A lot of LNG can come to Europe through Poland
By Pavol Szalai, EURACTIV, 20/5/18
May 22, 2018 - 4:00:41 PM

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Former Polish Prime Minister Beata Szydlo speaks during a press conference in the newly built Lech Kaczynski LNG Terminal in Swinoujscie, north-western Poland, 08 June 2017. The first commercial delivery of liquefied natural gas arrived from the United States to Poland earlier the same day. The terminal guarantees Poland's energy security, Prime Minister Beata Szydlo said. [EPA/JERZY MUSZYNSKI]

There is a strong possibility that Poland will build a floating Liquefied Natural Gas (LNG) terminal in Gdańsk, according to Fred H. Hutchison, who says “a lot of gas” can come to Central European markets this way.

Fred H. Hutchison is president and CEO of LNG Allies, an industry association working to expedite and maximise US exports of liquefied natural gas (LNG). In Bratislava, Hutchinson gave a speech at the Energy Committee of the American Chamber of Commerce.

Imports of natural gas from Russia have increased over the years and represented 34% of EU’s supply in 2016 according to ACER. Given the cheap price of Russian gas, do you see a window of opportunity for Amercian LNG on the European market?

It’s a fairly long window. Europe is clearly the closest market to the US. The gas from the Gulf of Mexico does not have to flow through the Panama Canal. Transportation costs are smaller for Europe than for other markets. There is a quite developed import terminal system.

A lot of the terminals on the Iberian Peninsula but also throughout Europe are currently underutilised so there is more ability to take LNG from the US. We have six export terminals under construction in the US. About 40% of the capacity is online and producing LNG.

The 60% is coming online mostly between early 2019 and through the first half of 2020. There will be an enormous ramp-up of the US LNG production in the short term. A lot of gas will come to Europe.

You said only about 11 to 15% of US exports currently go to Europe. Most of the US LNG is now going to Asia, where markets are ready to pay a higher price than in Europe. So where is the market opportunity?

Everybody agrees that production of gas in the EU is going to decline in the next few years. It is declining, the Dutch have shut their big field.

Yes, Russia’s pipeline gas imports have grown and they will likely continue to do so. We do see very specific places like Poland, which is the principal LNG access point for Slovakia and which will expand its existing LNG import facility by a third. There is a strong possibility Poland will put in a floating terminal in Gdańsk.

A lot of gas can come into the region through Poland. One of the problems with Russian gas is that it is totally opaque – about the cost of production and longevity of the fields.

 

Trump to promote US LNG exports at Warsaw summit

US President Donald Trump plans to promote US liquefied natural gas (LNG) exports at a meeting next Thursday (6 July) in Warsaw with a dozen leaders from Central and Eastern Europe, a region heavily reliant on Russian supplies.

Isn’t it just more profitable for US exporters to go to Asia, given the prices and rising demand? The rising demand trend is not so convincing in Europe.

Yes, it is not so convincing. There are other global markets that could be served in the Western Hemisphere. Mexico has been so far the principal destination for US LNG exports. They will probably decline as additional pipelines are built. Honestly, Latin America could use more LNG, but it remains uncertain whether or not the demand will grow.

From the buyer’s standpoint, the greatest markets are really not in Europe, they are in Asia. Nonetheless, Europe does have terminals, networks and a market that is becoming more liquid and diversified. We will see. Venture Global is the only project in the US that has managed to conclude two long-term contracts in Europe: one with Edison in Italy and one with Galp in Portugal. Those two companies judge US LNG interesting.

How many years does ‘long term’ mean?

Twenty years.

You mentioned the low utilisation rate of European LNG import terminals. Is it a sign of opportunity or a lack of interest in LNG imports? According to IGU’s 2017 report, the utilisation rate of the Polish LNG terminal was below 30% in 2016. Why would it be profitable for them to expand it?

The utilisation rate increased a little bit in 2017. The Poles seem committed to switching from other sources to gas. I know for a fact that a final investment decision to expand the capacity by a third is to be taken soon.

Europe in general has a low utilisation rate of LNG import terminals. Isn’t that a sign of a lack of interest?

After the 2008 global recession, gas utilisation in Europe declined. You also had warm winters. Last two or three winters have been colder, more like normal. The future demand is likely to be relatively flat or declining. Energy efficiency will increase and renewables will continue their penetration.

But again, indigenous supply in Europe from the North Sea is going to decline. Moreover, some countries will have to ask what combination will work best if they want to meet their COP21 (Paris Agreement) obligations.

The case of Germany strikes me. It has strong renewables policies but is phasing out its nuclear. In the short term, they use coal. Germany’s CO2 emissions have been relatively flat, whereas those of the US declined.

Are renewables your competitor or your ally?

Natural gas is a great complement to renewables, we have seen it in the US. When the sun doesn’t shine and the wind doesn’t blow, you need to step in and meet that demand. There may be a time when we will have a substantial utility-scale storage available.

And grid interconnections will help.

Within your lifetime, there will be a couple of revolutions or changes. In the short term, if Europeans want to get serious about carbon, you will need to run and extend your nuclear plants for as long as you can.

Nuclear is a zero-emission baseload power. You build your renewable fleet as fast as you can. You find a complement – in the short term it is going to be gas, in the longer term maybe storage.

And you get really serious about energy efficiency. You make your houses, factories and manufacturing processes energy-efficient. Then, whatever happens after 20 years, happens. It is probably going to be something we have not quite anticipated yet.

Do you see the future of gas in the next 20 years only in power or also in transport and other sectors like heating?

Using gas for heating and cooling is very smart. And transport is a great opportunity too – LNG is a great fuel for maritime use. Road transport and power production are all great areas. If you are truly honest, burning trees to make power is not a green solution. Biomass is certainly not a renewable energy in the time frame that’s needed to tackle climate change globally.

Croatia has tried building an LNG terminal for many years, but it hasn’t materialised yet. What are the chances in the short term?

I wouldn’t want to venture on what the odds are. There remain a lot of challenges. The political will with respect to the project in Croatia has solidified in the last few years.

But there is no sufficient gas demand in Croatia to support the import terminal itself. Whoever is going to build, finance and run it and hopefully make a profit, has to understand where gas demand can be secured.

The LNG producers in the US are at the moment not interested in going to Croatia and trying to aggregate that demand and make the commercial case for the terminal. But a regional consortium of oil and gas companies could do that. Until then, the project will continue to be challenged.

But we believe it’s a great strategic project for Europe. Any increase in supply to serve those markets would be useful.
Washington congratulates Lithuania for receiving first LNG shipment from US

The State Department congratulated Lithuania on Wednesday (23 August) for receiving the first shipment of liquified natural gas from the US. The move follows Donald Trump’s visit to Warsaw last month, where he promoted American LNG exports.

Some members of the European Parliament have criticised gas infrastructure projects for getting too much subsidies from the EU. For example, the Slovak-Polish interconnector will get 100 million euros. How do you respond to that criticism?

It is up to Europeans to decide what they want to do about their energy future.

From our standpoint, the big map of interconnections through North America shows that we have a very liquid market here. And we believe Europe would benefit from interconnections that make the market more liquid. Prices will be better with more points of entry, a more robust pipeline network and regulatory regime. And in some places like the Baltics, it would be useful to have a single harmonised regime for the markets.

The European Parliament is like the US Congress in a way: it is a diverse group of people with lots of different viewpoints. Ultimately the EU institutions and Member States have to judge what is in their best interest.

The critical MEPs say we cannot commit to the Paris Agreement and lower emissions, and on the other hand, subsidise fossil fuel like gas.

Gas is a fossil fuel, but it has the lowest CO2 emissions among fossil fuels. Europe would do well to continue to move towards the kind of situation our markets have moved us to in the US. It was not government intervention that moved us to a mix of renewables, energy efficiency and gas. It was the markets. As a result, we have the lowest levels of CO2 emissions in the power sector since the early 1990s. It’s a model that could serve Europe.

LNG Allies have not taken a position on Nord Stream 2. What is your personal view of the project, which obviously competes with American LNG?

LNG Allies are not against anything, never have been, never will be.

My personal view is that it makes sense to do everything to increase the competitiveness of the market across the European continent: finish building the infrastructure, diversify sources, diversify the types of energy use, use energy more efficiently and wisely. Nord Stream 2 has to be viewed against those criteria.

Will US sanctions hit Nord Stream 2?

The US position on Nord Stream 2 has not changed for several years. It has been the same under the Obama Administration as it is under the Trump Administration.

Yes, the government opposes Nord Stream 2 and promotes US LNG, but the two issues are not connected in the government’s mind.

I don’t think the current US administration is ready to use the authority the Congress gave them to impose sanctions on this particular project. But there is a near-unanimous political opinion that interference in the US elections is such a serious matter. If one more episode came to light, it would not surprise me to see the US Congress revisit this issue and not give the President the option.

US: Nord Stream raises intelligence concerns

The planned Nord Stream 2 gas pipeline from Russia to Germany raises US intelligence and military concerns since it would allow Moscow to place new listening and monitoring technology in the Baltic Sea, a senior US official said on Thursday (17 May).


Source:Ocnus.net 2018

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