How US LNG will refresh supply diversity in the CEE region

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Fred Hutchison, Executive Director, LNG Allies
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The CEE region is undergoing a profound change in terms of its interconnected energy market dynamics due to the constant evolution of liberalised energy markets and the need for supply security and diversity.

LNG Allies’ vision is to maximise US LNG exports to enhance the energy security of America’s allies as well as improve the economic environmental conditions worldwide.

Ahead of the 2018 CEE Gas Conference, Gastech Insights spoke with Advisory Board Member and Executive Director of LNG Allies, Fred Hutchison, to understand what the growth of LNG means for the region. 

Gastech Insights: What benefits can US LNG exports bring to the CEE region? 

Fred Hutchison: For many decades, Central and Eastern Europe was almost totally dependent on pipeline gas from Russia, a situation that can be traced back to the Soviet era when energy transport infrastructure was built to ensure such dependence. However, during the last decade several nations in the region – most notably Lithuania and Poland – built LNG terminals to add another supply  option. These recently added terminals and new interconnecting pipelines are linking Poland and Lithuania with their neighbors in the region and even creating a new gas pathway to Ukraine. As US LNG is added into the mix, the region will surely realize further fuel source diversity.

Gastech Insights: As LNG grows within the CEE region, what does this development mean for the gas market?

Fred Hutchison: The natural gas market in the CEE region is benefitting already from a diversity of supply. While there is (and always will be) indigenous production and pipeline gas from Russia, the introduction of LNG into the market – whether from the United States or other producing nations – can only increase market liquidity. And, remember, US LNG has limited take-or-pay requirements, is not linked to the global price of oil, and comes without destination restrictions.

Gastech Insights: What impact do recent US political changes have on the gas environment in Europe?

Fred Hutchison: LNG exports is not a partisan matter in the United States, unlike many other energy and environmental issues. Nonetheless, there is no question that the Trump administration is “all in” when it comes to supporting US natural gas exports, which is an improvement from the recent past when most U.S. Executive Branch political leaders were fixated on solar, wind, and other “renewables.” However, I should emphasize that the degree with which US LNG benefits Europe will be almost wholly dependent upon commercial agreements reached between non-governmental counterparties.

Gastech Insights: What can attendees of the CEE Gas Conference expect to take away in March 2018?

Fred Hutchison: Hopefully, those attending this important event will learn that when it comes to LNG the United States is – as US Energy Secretary Rick Perry and others on his leadership team have said – “open for business.”

Share your insights and join the conversation: How do you see the CEE gas industry developing in the next 5 years? Leave your comment below. 

Hear Mr Hutchison speak at the CEE Gas Conference on 7th March at 3:30 pm in the discussion “What impact will LNG have on the CEE gas and electricity markets” with Tellurian. Register now before the early bird rate ends on 4th February.

Image courtesy of LNG Allies