Pascual Discusses LNG at Atlantic Council

Ambassador Carlos Pascual, the former U.S. ambassador to Ukraine, addressed a packed room at the Atlantic Council on Thursday (April 3) to report on Ukraine and the E.U.– U.S. energy summit that took place in Brussels earlier this week. Pascual, the State Department’s Special Envoy and Coordinator for International Energy Affairs, spent nearly all of his time addressing natural gas with a particular focus on Ukraine.

For those who weren’t able to attend in person, the whole speech is available on the Atlantic Council website: Click Here. If you are interested in the subject, this one hour program definitely beats reruns of How I Met Your Mother. And, for those who prefer a few key quotes:

Let’s speak frankly about Russia. The point here is not to say that we don’t want Russia to produce gas or ship it to Europe. The point is to say that we want that to happen in a competitive environment. Ukraine will still need Russian gas. Europe will still need Russian gas. So, the environment we want [to develop] is one where there are multiple sources.

This is a critical moment for both sides. It is a critical moment for Europe and Ukraine to use this commercial reality. They need Russian gas, but Russia also needs to sell gas to them [since Russia has limited current capacity to ship gas to other markets, e.g. Asia]. So, how do we use that reality of interdependency to reach commercial relationships which will reinforce competition for the future?

Now let’s talk about Ukraine’s neighbors. Moldova is in a very dependent position. It’s gas pipelines come from Ukraine and then go to Bulgaria. It’s dependence on Russian gas is 100 percent. But, current the sole gas importer in Moldova is owned 50.1 percent by Gazprom… So we need to work with Moldova on that.

Bulgaria is also phenomenally dependent on Russian gas. In the near-term, the E.U. is looking at an interconnector with Greece that would allow some LNG into the Bulgarian market. Over the long-term, there are even greater options… such as the Southern Corridor project… including a spur into Bulgaria.

The E.U. has agreed in principal to build an LNG terminal that would benefit the Baltics [Estonia, Latvia, Lithuania] and Finland. They need to come to a decision on where it’s going to be built and how it’s going to be shared. Lithuania [is already building] an LNG terminal with relatively small capacity, that’s big enough to supply Lithuania, but not the entire region.

Finally, small [country-to-country] interconnections [are] a really big deal. What we’ve seen now is if you’re in Poland, you can import gas from Norway that would come through Germany… into Poland and, it’s not a crazy idea to bring that further into the Baltics. One of the Baltic countries could buy that [Norwegian] gas… but it might even get swapped out in Poland for Russian gas. It might seem convoluted, but these kinds of swaps occur all the time, all over the world.