EU Envoys Support LNG Export Measures

As promised, here is a readout from the news conference that LNG Allies facilitated in the National Press Club on Jan. 29 where ambassadors from Croatia, Czech Republic, Latvia, and Lithuania as well as the Deputy Chief of Mission from the Polish Embassy told reporters why their nations continue to be supportive of measures that would expedite U. S. LNG exports.

Amb. Petr Gandalovič, Czech Republic: The United States has recently taken an important step with regard to energy markets. On December 18, 2015, the U.S. crude oil export ban was lifted, which should help improve global markets over the long-term. And, when it comes to LNG—our subject this morning—the same applies. We welcome new, independent sources on the market—especially from sources that are not governed by political but rather business priorities… the better for world prosperity and safety.

The Czech Republic has experienced many situations where we realized that it was not only important to diversify pipelines and routes of distribution but also sources themselves. So, that applies to the situation of LNG from the United States.

We fully support the bill that is currently in the Senate and that’s not a new position for us. I would remind you that the V-4 [Visegrád-4] countries sent a letter to the congressional leadership two years ago supporting the first attempts to liberalize U.S. LNG exports. So, this is our consistent policy, and I am happy to confirm that this policy priority continues.

Amb. Andris Razāns, Latvia: Latvia is one of those countries in the Baltic region that until now has been fully dependent upon Russian gas. Of course, things are changing, and this is an extremely important year for my country. We are very close to creating very clear conditions on the ground for the liberalization of our gas market. Hopefully, that should be accomplished by the end of this year.

Already, our parliament is considering important amendments in our energy law. Those amendments will be posted very soon and at that moment the legal basis for the gas companies operating in Latvia will not differ from anywhere in the European Union. So, Latvia, will exit the period of time when we had a special derogation agreed with the EU that gave the right for a single monopolist to operate in Latvia. That means that we will be opening access to our gas storage and transmission infrastructure for third parties—for any company that would like to come forward and work in Latvia.

We will separate the ownership rights between companies that sell gas and companies that are in the business of transmission and storage. We will, therefore, be fully compliant with all EU laws beginning next year. That creates a very critical moment for my country. It creates new opportunities and opens the way for a fully functioning and transparent gas market throughout the Baltic region, provided that all missing infrastructure within the region is built.

By around 2020, the region should have a very different shape when it comes to a fully functioning gas market. And, that will create great opportunities not only for Baltic businesses, but also for American companies that would like to be more active in Europe. Latvia stands ready to do everything necessary to facilitate such market conditions.

Let me add just one thing: our exceptional situation of dependence on Russian energy was not something of our own choice. It is the result of 50 years of Soviet occupation. Before World War II, of course, we were not dependent on Russian gas or oil. It is very good that the European Union has found a strategic interest in investing in all parts of the EU to build up and finance missing energy infrastructure, such as the connections between Poland and the Baltic states and Finland and the Baltic states. I think we are on a very good path right now.

Amb. Joško Paro, Croatia: Croatia has a new government that is facing the LNG import issue squarely. It has made accelerated construction of the LNG terminal on Krk Island its top priority. I hope that after many years of delays we will soon be on our way to get this project working. That is one element.

The other element is that the new government also has a very clear picture about the strategic necessity of connecting the Baltic and Adriatic regions in both infrastructure and political terms. In the last six months, our president has worked hard to bring together all of the countries along that Baltic-Adriatic axis.

For example, she has been in Warsaw where she has met with very keen partners in Poland. The intention is to have a meeting in June of the political leaders along the axis. This is a very important development that compliments the European Union’s LNG strategy. These are very timely initiatives, especially when see recent developments in the relationship between Russia and Turkey and when we consider the potential for diversifying the energy supply of Southeastern Europe.

I also believe that there is a need to accelerate—or to make it easier—for U.S. LNG companies to export to the non-FTA [Free Trade Agreement] countries. And, I believe that countries on the Baltic-Adriatic axis should continue working together in that regard.

Amb. Rolandas Kriščiūnas, Lithuania: Let me start by saying that 2015 was a very important year for Lithuania and all the Baltic states. As you know, we were long considered an energy “island.” There were, for many decades, no links between the region and the rest of the EU, not just in gas but in electricity as well. Now, we have two electric transmission lines built, one under the Baltic Sea connecting us with Sweden—the so-called Nord-Balt Link—and the other connecting Lithuania with Poland and the rest of Europe, the so-called Lit-Pol link. So we are now connected to these two markets.

The other thing, and the topic for today, is natural gas. It took us almost a quarter of a century to break free from the grasp of Gazprom. And, of course, there was a period of time after the collapse of the Soviet Union when we thought everything was fine.

Having regained our independence we believed that it would be a story of “happily ever after”—like a fairy tale—so that we would have normal, economics-based relationships with our neighbors. And, that’s why we even sold our gas company to Gazprom. For some time, it was as we expected. But, then, we noticed that Lithuania was paying the highest gas price in the European Union. We were paying a political price because we had no option to buy gas from anywhere else. It doesn’t matter what the market price is “somewhere” if you have no connection to this market. It doesn’t make any difference for you.

That is why, when our LNG import terminal began functioning in Lithuania at the beginning of 2015, it really became a great new story for us. Currently we are working to develop the gas market and to buy gas at the best possible available terms for us. Of course, the LNG terminal is not just for Lithuania. It helps all of the Baltic nations to get an alternative supply of gas. My colleague from Latvia has described what his country is doing. Already today, our gas—imported as LNG—reaches Estonia. It travels up North and is helping Estonia secure a better negotiating position with Gazprom.

Gazprom will, of course, continue to be an important supplier for us, but it will not be able to ask whatever price it wishes. It must take into account the other possibilities that we have and that’s a very important development.

To connect this to the United States, Lithuania is always supporting any initiative to bring U.S. gas to our market as quickly as possible, taking into account the very practical obstacles that stand in the way. We will always be supportive of any measure that helps U.S. gas reach international markets because the United States is a very reliable partner. We are looking forward to the fact that U.S. gas will—one day soon—be reaching the shores of the Baltic countries and it will go, we hope through the LNG terminal built in Klaipėda, the seaport of Lithuania.

DCM Maciej Pisarski, Poland: Poland shares the predicament expressed by the ambassadors in terms of being very dependent upon a single source of gas supply from the same direction—from Russia. And, I don’t have to argue with you that such dependency is not a good thing. Dependency breeds instability and allows for the extraction of monopolistic practices and power. That always weakens the lesser side of the equation. We have seen all of these negative things over many years.

There have been some positive developments with regard to strengthening the energy security of our region and the ambassadors have pointed to some very specific projects. Of course, actions taken by the European Union with regard to the energy union and other regulations have also been very good. We have, however, also seen some actions in the reverse direction and here I would like to highlight the new strings of the Nord Stream pipeline, which is designed to bypass the land route, to bypass Ukraine, Poland, and other countries in the region. Frankly, in our opinion, if this project is completed we will only deepen the dependency of Europe on Russian gas and not weaken it. You can see there is still a struggle, still a debate about how to shape the European energy market and we are on the side of those who advocate for greater security and lesser dependency.

As you know, we have a new LNG terminal in Poland and this is the main element of our strategy to gain more energy independence. The terminal is located on the Baltic seashore in Świnoujście. It has the capacity to regasify five billion cubic meters, with an expansion to 7.5 bcm in the second phase of development. Last December the first tanker docked at the terminal and so it is in the process of starting operations. We expect that normal operations will commence in the second quarter of this year. Of course, this will give us an alternative and strengthen our security.

But, not only Poland’s. If you look at the map and the interconnection projects that are being developed, you see that we have one already to the Czech Republic and one with Ukraine—a small one, but it will expand. We will also develop a new interconnection with Slovakia and one with Lithuania. If you look at these projects, you see that they will create a much bigger market than just Poland for any LNG being shipped to us. It’s a very good situation, because it will give us an additional alternative and the potential for a possibly bigger market.

[But,] we have this problem of a [U.S.] legal condition that requires somebody to get a permit to ship the gas. That really restrains the potential of the market. By facilitating, liberalizing, or lifting those restrictions we can really tap into the existing and coming potential.

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