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Moniz Tells G-7 U.S. Gas Exports to Ease Europe Russian Need

U.S. natural-gas export capacity is being readied by the Obama administration to ease Europe’s reliance on Russian fuel in the coming years, Energy Secretary Ernest Moniz said.

Two liquefied natural gas projects will probably get environmental approval this summer and obtain final consent “fairly soon,” Moniz said in an interview with Bloomberg News in Rome after taking part in the Group of Seven nations energy summit. Moniz said he gave his G-7 colleagues an update on the projects.

“They asked me what was our plan with LNG exports, and I told them what our process is and where we are,” Moniz said. “The expectation is that the United States will become a substantial natural gas exporter towards the end of this decade.”

The G-7 meeting agreed in Rome to find new sources of energy to prevent Russia from using its oil and gas reserves as “a political weapon,” German Economy and Energy Minister Sigmar Gabriel said. Italian Economic Development Minister Federica Guidi, who chaired the meeting, said Italy was committed to LNG and that investment globally would make the energy source more competitive economically.

EU Reliance

The European Union’s reliance on Russian oil and gas has hampered the global response to escalating violence in Ukraine and the worst standoff with Russia since the Cold War. Russia under President Vladimir Putin provides about a third of the EU’s oil and gas needs, mainly via state-controlled OAO Gazprom and OAO Rosneft through pipelines that cross Ukraine.

The G-7 leaders found enough common ground in Rome to call for greater diversification of energy sources, investment in renewable generation and increased focus on efficiency. Differences were apparent in the discussion of the South Stream project, a planned pipeline that Gazprom plans to use to bring Russian gas to Europe, bypassing Ukraine.

Guidi said Italy continues to support the project. Moniz said it may run afoul of the EU’s Third Energy Package legislation.

South Stream “is not really contributing to diversity of supply for obvious reasons,” Moniz said. “That’s an internal European issue, but my understanding is that the Third Energy Package requirements are still under discussion, shall we say, in terms of that particular project.”

Nuclear Power

The ministers agreed to promote alternatives to burning hydrocarbons, including nuclear power, renewable generating technology and alternative forms of fuel, according to an e-mailed statement of their conclusions that didn’t mention Russia. They also cited the need to invest in power networks, building connections between nations and incorporating smart-grid technology. The U.K. is pushing European countries to expand the use of shale gas.

“At the core of the agenda is collective energy security,” Guidi, Italy’s minister for economic development, said in the statement. The ministers agreed they “need to support diversification of primary sources and of energy production and dispatching technologies.”

The conclusions will feed into a summit of G-7 leaders in Brussels in June. That meeting was called after Russia, this year’s Group of Eight host, was suspended from participating and the Sochi summit canceled followed Russia’s annexation of Crimea.

Difficult Choices

The G7 statement is not “the big blow to Putin that the West would like to deliver,” said Jim Krane, Wallace S. Wilson Fellow for Energy Studies at Rice University’s Baker Institute for Public Policy in Houston.

“It just sort of points up the difficult choices the Europeans face,” Krane said in a telephone interview from his office. “They’ve got these long and historic energy ties with Russia, and breaking them is going to be difficult and expensive.”

In Europe, the review of the energy mix “will mean never being 100 percent dependent on Russia,” German Chancellor Angela Merkel said after meeting with President Barack Obama in Washington on May 2. Germany, Europe’s biggest economy and Russia’s biggest EU trading partner, is pushing domestic renewables and energy efficiency, mirroring a wider EU strategy to protect supplies and the climate.

Energy Prices

The U.S., whose industry and consumers are benefiting from energy prices depressed by a domestic shale gas boom, can help with gas imports, Obama said in March during a visit to Brussels.

The EU’s overall energy dependency rate -- the percentage of imports from outside the bloc -- is set to rise to 80 percent by 2035 from the current 60 percent, according to the International Energy Agency.

One group of countries, which runs in an arc from Estonia in the northeast through Austria and down to Greece in the southeast, gets more than 75 percent of its gas imports from Russia, European Commission data show. Other major suppliers to Europe are Norway, Algeria and Qatar.

“No one expects that we can reduce Europe’s dependency overnight,” U.K. Energy Secretary Ed Davey said in an interview yesterday. “There’s clearly a lot of investment we can do in everything from energy efficiency to renewables to nuclear, as well as other forms of gas.”

To contact the reporters on this story: Andrew Frye in Rome at afrye@bloomberg.net; Ben Sills in Madrid at bsills@bloomberg.net

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net Kevin Costelloe, James Kraus

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