The American-Russian competition over the European energy market has reached a fever pitch in recent days, which is threatening a “bitter battle” between the two traditional rivals, especially in wake of the turbulence the ties have endured under US President Donald Trump’s tenure.
In a report published on Sunday, the Wall Street Journal stated that US attempts to export natural gas into Europe’s energy market are facing stiff resistance from the region’s dominant player: Russia. The newspaper pointed out that a tanker is scheduled to arrive in Lithuania this week carrying the first shipment of US liquefied natural gas to a former Soviet republic. It follows a handful of other shipments of US gas to Europe and comes in the wake of widespread predictions that American exports would help break Russia’s dominance of the European energy market.
The report added that Russia, however, is moving quickly to contain the new competition to its largest energy market. Its state-run energy companies are lowering prices, changing sales methods and developing their own LNG facilities. Moscow is also pushing ahead with a pipeline into Europe, which is opposed by both Washington and Brussels.
WSJ continued: “While European governments are eager to reduce Russia’s choke-hold, and its resulting political leverage, the region’s consumers are looking beyond politics for the lowest prices. That favors Russia. Last year, Russia exported record levels of gas to Europe, helped by lower prices and falling domestic production elsewhere in Europe”.
The report quoted Russia’s energy minister, Alexander Novak in an interview last month as saying: “We are tracking the situation on the global gas market and the growth of US shale gas production. Recently we have allocated a lot of efforts to boost our presence on the LNG market.”
According to the Wall Street Journal, many analysts still expect America’s nascent exports to eat into Russia’s share of the European market, which is currently around one-third. The US shale revolution has unlocked vast energy reserves, and the country is expected to become a net natural gas exporter next year.
Since the start of 2016, the US has been exporting gas around the world, from Latin America to Asia.
The report revealed that some lawmakers and officials in Washington have also talked about energy exports to Europe having a geopolitical, as well as commercial, benefit. The US has long criticized what it sees as Russian interference in Eastern Europe.
It added that in July, Trump told representatives of a dozen European nations that the US is eager to export energy supplies to them. It is known that the United States, with its growing use of shale gas, aims to become a global exporter of gas. This pushed American companies to seek new markets and compete with Russia over the European market.
In early August, the US president approved new sanctions against Moscow after succumbing to Congress’ pressure. These sanctions threaten to target the Russian energy sector, which has long been excluded from the trade measures taken against Moscow following the Ukrainian crisis.
For its part, Moscow hinted it will respond to the US measures.
Although Europe itself has already issued a number of sanctions against Moscow, its countries do not seem entirely happy about the US actions. Some have rejected such efforts.
German Foreign Minister Sigmar Gabriel said Washington’s measures violate international law, adding that the United States is confusing political and economic interests. He also pointed out that US plans to expel Russian gas from the European market in order to replace it with American gas is completely inappropriate.
The Europeans also stated that they are unwilling to waive the Russian gas or the "North Sea" line, which will increase the pumping of Russian gas into the main areas of the European continent. Jean-Claude Juncker, president of the European Commission, explicitly warned the United States, saying that the European Union is ready to impose sanctions against it in case Washington harmed European economic interests.
During the first quarter of 2017, Russian gas supplies to Europe maintained closeness to record levels, covering 41 percent of the continent's imports, according to a report by the European Commission.
In contrast, US natural gas production has doubled since 2005 faster than consumption. The United States is expected to officially become a gas exporter next year, said a report by the US Department of Energy.