CI VIEW: US House Foreign Affairs Chairman says US energy initiatives aimed at breaking Gazprom monopoly

 

WASHINGTON/WARSAW (CI Ukraine) — The United States Congress needs to expedite legislation allowing for the export of US LNG and crude to Europe and develop shale gas as the way to end Gazprom’s monopoly in Central and Eastern Europe, US House Foreign Committee Chairman Ed Royce (R-CA) said.

[US House Foreign Affairs Chairman Ed Royce (R-CA) speaks to Capitol Intelligence using CI Glass at House Foreign Affairs Committee hearing on Ukraine March 26, 2014] 

In an interview with Capitol Intelligence, Royce said while it will take time for US LNG and crude oil exports to ease Central and Eastern Europe’s dependence on Russian gas, legislation allowing for such exports would have an immediate impact on worldwide energy prices.

“The possibility of shale gas exploration, not just in western Ukraine but in the rest of the region but throughout the region, the building of additional terminals for LNG, the potential change in policy in the United States to expedite the export of gas from here and the long term strategy of other alternatives for energy,” Royce said, adding. “All of that goes to breaking the grip and monopoly that Gazprom, right now Russia, has in a large part of the market in Eastern Europe.”

Poland may hold Europe’s largest reserves of shale gas, an economy ministry spokesperson said. The government is keen for exploration and extraction of the resource to take off as soon as possible and believes domestic gas production may play a significant role in supplying the country’s energy needs by 2020.

The government has been pressuring the largest Polish energy companies to focus their upstream activities at home, a Warsaw-based lawyer working for two of the firms said.

PKN Orlen and Grupa Lotos, oil refiners, and natural-gas company PGNiG have all been exploring for shale gas. All three companies are listed, but remain under operational control of the state treasury.

However, the government’s work on enabling legislation has stalled, the lawyer and an energy banker said. Uncertain regulatory framework has slowed down the development of the industry and prompted Exxon Mobil to quit the country in 2012.

While the US oil super major blamed its decision on unsatisfactory results of test drills, the lawyer and the banker both said the company would have continued exploration, had it been confident of a supportive regulatory framework.

While energy independence has long been a priority for successive Polish governments, there is hope that the recent deterioration in relations between Russia and the EU will spur the government into speedier action on enabling the development of the shale-gas industry, the banker said.

Economy ministry officials have contacted several energy companies in recent weeks to consult about their expectations in this area, the banker added, while declining to name the companies. However, ConocoPhllipssaid it is already working in Poland to develop shale gas and that final results will depend “on the rocks”, a ConocoPhillips spokesman said.

Royce also said he would not be opposed to the US government releasing oil from its almost 700m barrels held in Strategic Petroleum Reserves. Analysts believe a release, which would need to be coordinated by the US Administration and the International Energy Agency, would lead to a USD 10 to USD 13 barrel drop in worldwide oil prices.

“The advantage is if we announce national plans to do it, the future’s market reacts instantaneously,”  Royce said, adding “Part of our intention here is to increase the focus on what we can do in the United States to encourage more (energy) diversification in Eastern and Central Europe with respect of gas (and oil) supplies.”

Other shale gas development, Polish energy group PGE is preparing to build a nuclear power plant using technology from GE/Hitachi or Westinghouse/Toshiba as well as European players.

Hungary’s Minister of State for National Economy Prof. Dr. Zoltan Csefalvay told Capitol Intelligence during a recent visit to Washington said his country is committed to diverse energy sources and noted that energy costs three times more in Eastern Europe than its does in the United States.

 

[Capitol Intelligence interviews Hungary’s Minister of State for National Economy Prof. Dr. Zoltan Csefalvay using Google Glass at US Chamber of Commerce in Washington, DC]

On March 26, the US Senate Energy Committee held a hearing on US LNG and crude exports in which centered around fast tracking approval for the building of LNG terminals and granting permits to export LNG to non-members of US Free Trade Agreement countries.

By PK Semler in Washington, DC and Aleksander Nowacki in Warsaw

Copyright of Capitol Intelligence Group – Turning Swords into Equity (™)