Ukraine Crisis: How Natural Gas Can Be Used as a Diplomacy Tool

Mar 11, 2014

by Steve Champlin

government, lng exports, russia, ukraine

Russia’s invasion of Ukraine has fueled debate on increasing liquefied natural gas (LNG) exports from the US. As tensions mount in Ukraine, there are concerns about Russia using their LNG production as a strategic political tool.

Senate Energy and Natural Resources Committee ranking member Lisa Murkowski (R-Alaska):

“I think it speaks to the bigger question, which is you’ve got a situation over in Ukraine right now where Russia, as a nation, has been basically using their energy resources for political leverage,” Murkowski said. “And not only Ukraine, Europe feels it, so when we — whether we’re dealing with an immediate crisis like we’re seeing unfold in Ukraine, or whether we’re just thinking long-term — I think we need to know you will have nations that will use their energy assets as strategic assets.”

Fast Facts about Russia and Natural Gas:

• Russia is the second largest producer of natural gas (after the US.)
• Around 60% of Ukraine’s gas is supplied by Russia.
• Since 2006, Russia has cut off gas supplies to Europe and Ukraine twice.

These concerns have led to a push for the US to step up and increase their LNG exports in order to reduce the looming threat of Russia cutting off gas supplies to other nations. This basically takes US LNG exports from an energy or economic issue to a diplomatic one, with the call for allowing nations to purchase LNG from the US as opposed to just offering monetary aid packages.

What’s stopping LNG exports?

• The Energy Department approves LNG exports on a case-by-case basis, which can be a long process.
• Even if the approval process was expedited, there is no plausible system in place to immediately increase the LNG exports from the US – it is estimated that LNG export facilities, including equipment and docks, won’t be in place until 2017, according to industry group America’s Energy Advantage.

However, it brings up the interesting point that energy production has more of a wide reaching effect than simply its intended physical use as fuel and has the ability to potentially influence strategic global relationships.

Do you think the US should focus on increasing LNG exports? Leave a comment with your thoughts below.

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