Liquefied natural gas (LNG) will have a hard time competing against piped gas which will be cheaper in most cases, therefore US LNG exports will not make the Southern Corridor obsolete, Gal Luft, co-director of the Institute for the Analysis of Global Security (IAGS), a Washington based think tank focused on energy security, and a senior adviser to the US Energy Security Council.
“Europe needs both LNG and natural gas. After all, it is not clear how many of the LNG terminals that are being touted will actually be financed and built. And if they do get built, there is real risk that over capacity of US LNG would collapse global prices and drive US projects into bankruptcy,” said the expert.
He pointed out that it is going to be a bumpy road for the US LNG play.
Luft believes that US LNG exports will be directed mainly to eastern and central Europe - primarily Poland and the Baltics.
The Asian market is less likely to be a major market for US gas due to strong competition from Australia, Russia and the Middle East, according to the expert.
“Trump's policies do not aim to undermine Russia but to elevate America. Energy exports is one of the few ways for the US to improve trade balance with its main trading partners, something Trump cares deeply about, while creating jobs and economic development in the US,” he added.
Luft noted that while all eyes are on the LNG story, the big surprise can come from coal.
“The US has the world's largest reserve of coal and has vast surpluses of coal to share with the rest of the world, particularly developing Asia where coal is still king,” he said.
But there is need for coal export terminals and the logistical infrastructures that would allow US coal to reach the coasts, the expert explained.
Despite rise in domestic oil production, the US still imports 10 million barrels of crude per day, so talks about being net exporter of crude are nonsensical, according to Luft.
Earlier, the US President Donald Trump said that the country is on the cusp of a new energy revolution.
Trump cited a series of steps the administration has taken to boost energy production and remove government regulations that he argues prevent the United States from achieving “energy dominance” in the global market.
“Together, we are going to start a new energy revolution — one that celebrates American production on American soil,” Trump said in a statement, adding that the US is on the brink of becoming a net exporter of oil, gas and other energy resources.
World media monitoring