The People of America's Oil and Natural Gas Indusry

U.S. Energy Exports Opportunity Knocks

Mark Green

Mark Green
Posted October 15, 2015

Reuters reports that Lithuania is in talks with U.S. liquefied natural gas company Cheniere Energy, seeking to reduce its dependence on Russia for LNG supplies. Lithuania opened an LNG import terminal last year, and its gas supply contract with Russian state-owned supplier Gazprom is scheduled to expire at the end of the year. Rokas Masiulis, Lithuania’s energy minister:

“We would love to have U.S. cargo in our region to have competition with Gazprom. … I believe negotiations with Gazprom now will be on competitive, reasonable terms and that will be just business and nothing else. … After we have built an LNG terminal, there is no possibility of blackmail. Since we think there is no possibility of blackmail, discussion will be rational and economical rather than political. This is a big step.”

The minister speaks diplomatically, so let’s read between the lines a bit. We suspect that Lithuania is trying to secure the diversification of its energy supply. The country wants options, additional sources of LNG so that it is beyond leveraging by Russia on natural gas. Russia did this with oil in 2006, Reuters reports.

At the same time, Masiulis told Reuters that Lithuania also would be open to buying U.S. crude oil if the United States repeals its current ban on the export of domestic crude:

“We are at this moment looking at the United States – crude.”

The development is significant and should impact policymakers involved in the U.S. export debate. With Lithuania there’s a real-world example of the kind of market and foreign policy scenario available to the U.S. – if America chooses to export domestic energy.

Lithuania is a case study that screams “opportunity” to the United States, the world’s No. 1 producer of oil and natural gas – which retains an outdated, anti-competitive, four-decades-old ban on oil exports, and which so far continues to dribble out federal approvals for privately-financed LNG export facilities.

There’s no question overseas buyers seek U.S. energy, including allies like Lithuania that don’t want to remain subject to the risk of energy leveraging. During a conference call with reporters this week API President and CEO Jack Gerard called this using “energy resources as a diplomatic cudgel.”

So, what will members of the U.S. Senate do? The House passed legislation last week that would end the oil export ban, despite an ill-conceived veto threat from the White House. Study after study – and now Lithuania’s interest in U.S. energy – support the export of crude oil for domestic jobs, economic growth, energy production and help to allies abroad. The Senate should follow the House’s lead, and then the administration should rethink its exports opposition.

Lifting the ban would let U.S. oil access global markets to compete with supply from other countries. Gerard:

“At a time when this nation is leading the charge on a deal that would allow Iran to export  more of their energy resources, it makes no sense to hamstring U.S. producers, preventing them from accessing the world market, and enhancing America’s position as a global energy leader.”

Likewise, the Energy Department should approve remaining applications to export LNG to non-Free Trade Agreement nations. Lithuania and others are waiting.

Even now other opportunity presents itself – and might be slipping by. PressTV reports that Iran is poised to sell crude oil to Poland. The Iranians also plan to talk to Polish counterparts about LNG.

The arguments against lifting the crude oil export ban do not hold up under economic or security analysis. Now we see actual opportunities for U.S. energy to make a difference in terms of the global energy supply and international stability – if the United States ends it antiquated policy of self-sanctioning on energy. The words of Petr Gandalovic, the Czech Republic’s ambassador to the U.S., supporting legislation to end the oil export ban earlier this year still resonate:

“I can predict that if there is an alternative coming from the U.S., as a democratic state that doesn’t use natural resources as a political tool, the world itself will be a … safer place.”


ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.