Thu. Sep 29th, 2022

Prof. ST Hsieh

Director, US-China Energy Industry Forum

626-376-7460

[email protected]

February 7, 2022

The world focus on the Ukraine crisis is about geopolitical rivalry between the US and Russia, but the core issue is energy security. Europe depends on Russia energy supply for decades. Before any crisis with Russia in Europe flares up, the US has to take actions ensuring Europe’s energy supply. Especially now, global inflations are linked to high energy price around the world. The following reports showcase the US efforts, but it is not clear at all that everyone is comfortable.

ST Comments:

  1. Joseph Borrell, the EU Foreign Policy Chief said the immediate priority is to diversify sources of energy and gas flows to avoid supply disruption and “ensure that the world energy markets will be liquid, competitive and well supplied”.

The Russia-US conflict in Ukraine could happen anytime and could be over with disastrous human causalities in days. Along with global economic recession could last for years. “The immediate priority is to diversify sources of energy and gas flows to avoid supply disruption,” it is just not going to help soon enough!

  1. Further, “ensure the world energy markets will be liquid, competitive and well supplied” is not the call of EU to make as it depends on Russia for energy supply. Note Russia provides about 40% of Europe’s natural gas. Should EU negotiate with Russia rather than dedicate the terms?
  2. Facts and statements: “It is unacceptable to use energy supply as a weapon or geopolitical lever,” the EU-U.S. statement said. Gazprom has said it is fulfilling all long-term contracts, and the Kremlin says it is not planning an invasion.
  3. A major confusion in now is the short-term energy supply shock to Europe if Ukraine war erupts vs the long-term energy security for Europe. Energy supply shock does not have to happen, but long-term energy security will need political leadership and commitments.

STH

UPDATE 1-EU, US pledge gas cooperation as tensions rise over Ukraine

Timothy Gardner and Kate Abnett
Mon, February 7, 2022, 11:03 AM

(Updates with comments from Blinken, Borrell, and quotes EU-US Energy Council statement)

By Timothy Gardner and Kate Abnett

WASHINGTON/BRUSSELS Feb 7 (Reuters) – The United States and the European Union pledged on Monday to work to ensure gas supplies can respond to disruptions in pipeline gas flows, as tensions rise over the massing of troops on Ukraine’s borders by Russia, Europe’s biggest gas supplier.

“We’re working together right now to protect Europe’s energy supply against supply shocks, including those that could result from further Russian aggression against Ukraine,” U.S. Secretary of State Antony Blinken told reporters in Washington, alongside Josep Borrell, the EU foreign policy chief.

Europe’s dependence on Russian gas has come under scrutiny in recent months as lower than expected supply from Russia and rising tensions over Moscow’s build-up of more than 100,000 troops on its borders with Ukraine have helped to push prices to record highs.

Russia provides about 40% of Europe’s natural gas.

Blinken said the coordination with allies and partners includes “how best to share energy reserves in the event that Russia turns off the spigot, or initiates a conflict that disrupts the flow of gas through Ukraine”.

Borrell said the immediate priority is to diversify sources of energy and gas flows to avoid supply disruption and “ensure that the world energy markets will be liquid, competitive and well supplied”.

The officials spoke earlier at an EU-U.S. Energy Council meeting.

A joint statement of the council said the EU and the United States intended to work together so global liquefied natural gas (LNG) markets can provide “additional and diversified supplies in case of pipeline gas disruptions in the short term as countries move away from fossil fuels and towards a sustainable net-zero future”.

Lower than usual gas supplies from Russia in recent months have prompted EU officials and the International Energy Agency to accuse Moscow of contributing to an under-supply to Europe.

“It is unacceptable to use energy supply as a weapon or geopolitical lever,” the EU-U.S. statement said.

Gazprom has said it is fulfilling all long-term contracts, and the Kremlin says it is not planning an invasion.

Europe’s LNG imports hit a record high in January at 11.8 bcm, with nearly 45% coming from the United States.

As it reviews its contingency plans for gas supply disruptions, EU officials have been in talks since late last year with suppliers including Qatar and Norway.

Initially, the talks were primarily a response to high prices, but the heightened tensions with Russia have intensified the discussions.

“There was a clear willingness from Azerbaijan to support the EU in case of a disruption of gas flows,” EU energy policy chief Kadri Simson said after meeting government officials in Azerbaijan last week.

Unused LNG infrastructure capacity in Europe could handle bigger volumes, although analysts warn of bottlenecks including limited global liquefaction capacity.

The joint statement made clear gas could only be a short-term solution, citing the longer term need to move away from fossil fuels, such as gas, as the EU seeks to limit global warming and achieve net zero emissions by 2050. (Reporting by Kate Abnett and Timothy Gardner; additional reporting by Doina Chiacu, Daphne Psaledakis, Jonathan Landay and Michael Martina in Washington, editing by Barbara Lewis)

Taiwan says US has not approached it on LNG diversion

in General Energy News 07/02/2022

Taiwan has not been approached by the United States on the issue of diverting some supplies of Liquefied Natural Gas (LNG) to Europe if the Ukraine crisis leads to a disruption, the economy ministry said on Monday (Feb 7).

Last month, the United States, the world’s top producer of natural gas, asked Qatar and other major energy producers to examine whether they could supply Europe if Russia were to cut supplies as a result of tension over Ukraine.

The United States has also asked Japan if it could divert some LNG to Europe in case of such a disruption, Japanese government sources told Reuters last week, and Japan has said it would consider how it could help.

Responding to questions on whether Taiwan, another major Asian LNG customer, had also been asked to do so by the United States, the economy ministry said it had “not received any relevant information or inquiries”.

In a statement, it added: “Our country’s natural gas imports come from a variety of sources, and (it) continues to adapt the procurement strategy to diversify import risks.”

Taiwan gets its LNG from more than 10 nations such as Australia, Indonesia, Qatar and Russia, from both long- and medium-term contracts and on the spot market as needed, the ministry said.

The island “continues to maintain diversified and stable natural gas sources”.

Taiwan aims to generate more electricity from LNG in the shift away from both coal-powered and nuclear plants, and is building a massive new LNG terminal off its northwestern coast.

Last July, state-owned refiner CPC Corp signed a 15-year LNG supply agreement with Qatar Petroleum.

CPC said that from this year it would buy 1.25 million tonnes of LNG annually from Qatar, for domestic consumption.

Taiwan began importing LNG from Qatar in 1997.
Source: Reuters

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