America’s New Energy Diplomacy
Poland wants to reduce its reliance on Russian energy, and last week its state-owned oil and gas company, PGNiG , signed its first five-year deal to buy American liquefied natural gas. The agreement illustrates how the energy boom from the fracking revolution can serve U.S. national interests and deter the reach of dictators abroad.
Moscow has long used its energy resources as a political weapon. Gazprom , the Kremlin-owned energy company, currently provides more than two-thirds of Poland’s gas, and other European nations also rely heavily on Russian energy. President Vladimir Putin has used that dependence as a diplomatic cudgel, threatening to cut off supplies. And on several occasions he has followed through.
But Russia’s era of go-freeze-yourself foreign policy may be drawing to a close. In 2015—the year Moscow cut off gas supplies to Ukraine—the U.S. surpassed Russia as the world’s top natural-gas producer. By February 2016 major shipments of American LNG were headed abroad for the first time. Two months after U.S. LNG from the lower 48 states hit the export market, Poland’s PGNiG announced that it didn’t intend to renew its long-term agreement with Gazprom, which will expire in 2022.
President Trump has built on that momentum. “America stands ready to help Poland and other nations diversify their energy supplies so that you can never be held hostage to a single supplier,” he said during a July visit to Warsaw.
Under the deal announced last week, the British utility Centrica will deliver as many as nine cargos of LNG, or roughly 30 billion cubic feet based on average shipments, for Polish consumption. Centrica buys that LNG from Cheniere Energy ’s Sabine Pass terminal in Louisiana, which liquefies natural gas from more than a dozen states and Canada.
That’s a modest delivery, but it’s “most likely the first in a series of contracts,” and Poland’s long-term goal is to “increase the energy security in this region, which has historically been dominated by Russian gas,” executives from PGNiG explained. By offering an alternative to Russian energy, the U.S. empowers its European allies and weakens the Kremlin’s coercive regional influence.
Appeared in the November 28, 2017, print edition.