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talkpoliticsWhile the world was looking in dismay at Trump's umpteenth muscle-flexing statement that inflamed the tensions in various conflict areas like Korea, Afghanistan or Iran, the US were still busy, exporting shale gas to Europe. The purpose of the whole exercise is well-known of course: to break Russia's dominance at the European energy markets. And we're not talking of a political act here, but a merciless trade war. The US has been trying to push its rivals out of the global gas market, which is currently dominated by Qatar and Russia. We all know what's happening to Qatar right now, with the help of America's main allies in that region. As for Russia, it's also trying to counter by expanding its gas supplies. They've tried to diversify the delivery means too, including huge new tankers transporting liquid gas. They also have 15 of those.
It's no coincidence that Trump made a tour around East Europe earlier this year. Just like all his predecessors, he's been lobbying on behalf of the big US companies. The US is now looking for the weaker spots on the market, where it could make inroads, and begin the next stage of this scramble. Naturally, these spots are countries that are simultaneously hostile to Russia and are trying to pursue policies that are somewhat emancipated from Brussels and Berlin. Thus, Lithuania became the first post-Soviet republic to get a liquid gas delivery from the US. From their standpoint, that's not just a politically significant step, but also crucial for their economy, as the Baltics have been dangerously dependent on Russian energy sources for decades.
Other countries in the region are also about to follow Lithuania's example. Some, like Poland, are even way ahead in that respect. Last month, Poland became the first East European country to get long-term guarantees for liquid gas deliveries from the US. When Trump visited Poland, he said he was hoping for stronger ties between the two countries, especially in the energy sector. After the meeting, the Polish president said his country would sign a Trans-Atlantic deal for gas deliveries, allowing itself to diversify its energy base, and split away from the Russian energy blackmail.
The US has started supplying the UK with gas as well, a market where the Russians had also started making inroads in recent years. US liquid gas exports to Europe have reached 1 bn m3 for the last 3 months alone, including countries like Portugal, Poland, Spain, Turkey and the Netherlands.
The main obstacle is of course the Russian state oil and gas giant, Gazprom. And the Russians do not mean to give up so easily. After all, the European market makes up to 3/4 of Russia's total gas exports, and that's the main driving engine behind Russia's economy. Which is why it's of vital importance for sustaining Putin's regime, because the oil and gas revenue accounts for about half of Russia's state budget. You can imagine what would happen if that source gets drained.
The US is using this dependence on one source of income quite skillfully, be it through sanctions restricting the access to foreign investment or other means to pressure Russia. This is forcing the Russians to make painful concessions for the sake of getting the existential minumum from revenue, which makes their product more expensive, less profitable and more inefficient.
In the long term, the main question for most of America's gas customers would be the price. Right now, it's still higher than the Russian one because of the cost for transportation. The gas that the US exports for Japan for example costs 244 $ per 1000 m3, and 255 for Holland and Portugal. In the meantime, Russia exports gas for Germany worth 179 dollars. There's a huge difference.
Except, a few months ago a US tanker delivered liquid gas to Poland that cost only 151 $. It was probably beneath the profit threshold, but that doesn't matter. The market was already hooked.
At the moment, the US gas companies are rubbing their hands in expectation of 2019 when the contract between Gazprom and Ukraine expires, and the transit gas from Russia to Europe may start to be sold at much higher prices. In the meantime, the US will keep pressuring Russia with all means available. As the Russian prime minister Medvedev said after the US sanctions on Russia were tightened yet again, we're talking of an outright trade war. And right now, Russia is losing it.
It's no coincidence that Trump made a tour around East Europe earlier this year. Just like all his predecessors, he's been lobbying on behalf of the big US companies. The US is now looking for the weaker spots on the market, where it could make inroads, and begin the next stage of this scramble. Naturally, these spots are countries that are simultaneously hostile to Russia and are trying to pursue policies that are somewhat emancipated from Brussels and Berlin. Thus, Lithuania became the first post-Soviet republic to get a liquid gas delivery from the US. From their standpoint, that's not just a politically significant step, but also crucial for their economy, as the Baltics have been dangerously dependent on Russian energy sources for decades.
Other countries in the region are also about to follow Lithuania's example. Some, like Poland, are even way ahead in that respect. Last month, Poland became the first East European country to get long-term guarantees for liquid gas deliveries from the US. When Trump visited Poland, he said he was hoping for stronger ties between the two countries, especially in the energy sector. After the meeting, the Polish president said his country would sign a Trans-Atlantic deal for gas deliveries, allowing itself to diversify its energy base, and split away from the Russian energy blackmail.
The US has started supplying the UK with gas as well, a market where the Russians had also started making inroads in recent years. US liquid gas exports to Europe have reached 1 bn m3 for the last 3 months alone, including countries like Portugal, Poland, Spain, Turkey and the Netherlands.
The main obstacle is of course the Russian state oil and gas giant, Gazprom. And the Russians do not mean to give up so easily. After all, the European market makes up to 3/4 of Russia's total gas exports, and that's the main driving engine behind Russia's economy. Which is why it's of vital importance for sustaining Putin's regime, because the oil and gas revenue accounts for about half of Russia's state budget. You can imagine what would happen if that source gets drained.
The US is using this dependence on one source of income quite skillfully, be it through sanctions restricting the access to foreign investment or other means to pressure Russia. This is forcing the Russians to make painful concessions for the sake of getting the existential minumum from revenue, which makes their product more expensive, less profitable and more inefficient.
In the long term, the main question for most of America's gas customers would be the price. Right now, it's still higher than the Russian one because of the cost for transportation. The gas that the US exports for Japan for example costs 244 $ per 1000 m3, and 255 for Holland and Portugal. In the meantime, Russia exports gas for Germany worth 179 dollars. There's a huge difference.
Except, a few months ago a US tanker delivered liquid gas to Poland that cost only 151 $. It was probably beneath the profit threshold, but that doesn't matter. The market was already hooked.
At the moment, the US gas companies are rubbing their hands in expectation of 2019 when the contract between Gazprom and Ukraine expires, and the transit gas from Russia to Europe may start to be sold at much higher prices. In the meantime, the US will keep pressuring Russia with all means available. As the Russian prime minister Medvedev said after the US sanctions on Russia were tightened yet again, we're talking of an outright trade war. And right now, Russia is losing it.
