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Page added on July 12, 2018
Trump Is Right About Russian Energy, And Here’s What He Can Do About It
One of President Trump’s major points at the July 11, 2018 NATO meeting was that Germany is enriching Russia and making itself beholden to Russia by relying on Russian natural gas for most of its power production. He’s right. But the United States could be in a position to help Europe ween itself off of Russian energy, if the U.S. could improve its natural gas transportation and export infrastructure.
U.S. President Donald Trump, second right, gestures while speaking to NATO Secretary General Jens Stoltenberg, left, during their bilateral breakfast, Wednesday, July 11, 2018 in Brussels, Belgium. (AP Photo/Pablo Martinez Monsivais)
In 2009, Russia now supplied Germany with about 40% of its natural gas needs. Now, Russia is responsible for over half of Germany’s natural gas supply. In 2017 Germany imported over $21 billion in natural gas from Gazprom. Germany’s reliance on Russia to keep the lights on has only increased since Germany decided to phase out most of its nuclear power plants after the Fukushima nuclear power plant meltdown in 2011. The ties between Germany and Russia also became close when former German Chancellor Gerhard Schröder got involved with Russian state controlled energy companies Gazprom and Rosneft.
In 2017, Schröder was appointed chairman of Rosneft. By that point he had already served as chair of the Gazprom-dominated Nord Stream consortium. This group runs the Nord Stream pipeline that feeds Russian natural gas into Europe, and, of course, Germany, via the Baltic Sea. Nord Stream is in the process of negotiating with the EU to build a second pipeline, Nord Stream II, to deliver even more Russian natural gas to European power companies. Germany is a major proponent of Nord Stream II, which, if built, would make it effectively impossible for European countries to diversify their sources of energy away from Russian natural gas. When it comes down to it, Germany has not only enslaved itself to Russia’s natural gas empire , but its insistence on the new pipeline will drag much of the rest of Europe into the same situation. With the new pipeline, Russian gas would be so cheap that no other source would be competitive.
President Donald Trump meets with German Chancellor Angela Merkel during their bilateral meeting at the NATO Summit in Brussels, Belgium, Wednesday, July, 11, 2018. (AP Photo/Pablo Martinez Monsivais)
Many European countries want to reduce their dependence on Russian natural gas, not increase it. They are looking to import natural gas from other sources and have built re-gassification terminals to import liquefied natural gas from elsewhere. The United States is in an excellent position to provide liquified natural gas to Europe, except that U.S. infrastructure and transportation facilities are not designed to handle the amount of natural gas Europeans need to get out from under the yoke of Russian supply.
MORE FROM FORBES
The U.S. is a major producer of natural gas. Fracking in areas like the Marcellus shale region have produced a glut of natural gas on the east coast of the United States. Natural gas is also produced as a byproduct of fracking in shale oil regions like the Permian Basin in Texas. This gas is collected in pipelines and used in power plants and as feedstock in petrochemical plants. It can also be liquefied and exported, but lengthy permitting processes have made building liquefaction plants difficult. Moreover, waivers from the federal government are needed to export liquified natural gas to many of the most profitable markets–such as much of Asia–and these waivers have not been easy to obtain. Currently, the United States has only two liquefaction plants that can export natural gas to any country in the world – Cheniere Energy’s Sabine Pass in Louisiana and Cove Point in Maryland. Both were opened in the last two years.
In addition to liquefaction facilities, the U.S. needs more natural gas pipelines to transport the gas within the U.S. before it is loaded on tankers (in liquid form) for export. If the U.S.commits to expediting the permitting and waiver process to build infrastructure now, perhaps it could convince Europe to buy its natural gas from North America instead of Russia.
23 Comments on "Trump Is Right About Russian Energy, And Here’s What He Can Do About It"
CAM on Thu, 12th Jul 2018 7:50 am
Really! Why would Germany (or any nation) want to give Trump the ability to black mail them. Does anyone really think that if Germany got a significant portion of their energy from the US, that Trump would not use that as a weapon against them to get whatever he wanted. And, then complain that they were weak because the depended on the US for their energy supplies. If Germany (and every other nation) is smart, they will not depend on the US for anything. Better to depend on Russia!
twocats on Thu, 12th Jul 2018 8:41 am
well put CAM. here is the money quote,
“With the new pipeline, Russian gas would be so cheap that no other source would be competitive.”
those dastardly Russians!! So cheap its enslaving!!!!! I’m a slave to deals!
Duncan Idaho on Thu, 12th Jul 2018 8:58 am
Fat boy is a TV game show host, and a 4 times bankrupt real estate salesman.
He makes a living by hustling and skimming .
Actually, a perfect leader for late stage capitalism.
deadly on Thu, 12th Jul 2018 9:13 am
Russia needs to increase the price of launching an American astro-nut into space.
Maybe ten times, something like that. It’s takes some careful measuring to launch a bag of bones into space.
There is just too much natural gas on the market that is free to purchase with no contract. What Trump wants to do is to have every cubic centimeter of natural gas under contract. The price will increase and more money can be skimmed with the market forces at play.
It’s all a scheme to make more money, scam and fraud are included in the business model, go figure. The Russians are providing a product. Trump wants to control how the money passes hands.
What more needs to be known?
Trump is right? Yeah, right.
ABOUT LNG
Natural Gas
Natural gas is composed primarily of methane, which is the simplest of hydrocarbons with one carbon atom and four hydrogen atoms. More than 65 million Americans use natural gas to heat their homes.
Liquefied Natural Gas (LNG) is simply natural gas that is cooled to minus 260° F, at which point it becomes a liquid that can be transported without high compression.
Converting natural gas to LNG reduces its volume by about 600 times, so it can be moved by tanker trucks and in ISO containers on roads and highways, or on the water.
Once delivered to its destination, the LNG is warmed and regasified so that it can be used just like existing natural gas.
Jean Paul Getty on Thu, 12th Jul 2018 9:55 am
Where does the US suggest that Germany buy their energy from??? Iran??? all other oil/gas production on the planet is already sold???
Surely the US does not want to see a bidding war & $100+/BBL Oil prices???
radon1 on Thu, 12th Jul 2018 10:12 am
With the pipeline, Russia will be transporting as much gas to Germany, as without the pipeline.
Antius on Thu, 12th Jul 2018 10:59 am
This is why I think large scale energy storage is unlikely to catch on. Compressed air energy storage has about the lowest embodied energy of any electricity storage system. In theory, this should make it cheaper and more sustainable than competing options. This compressed air receiver tank is rated to 10bar and contains 450litres of air.
https://www.completepumpsupplies.co.uk/grundfos-gt-d-450-litre-vertical-expansion-vessel?gclid=EAIaIQobChMIzLaDt_KZ3AIVWmcZCh0K8gSBEAkYAiABEgIwU_D_BwE
That works out at 1.08MJ of energy, or about 0.3kWh. It is reduced in price to £760, which is about $1000. That works out at about $3300 per kWh. The average U.S or Canadian house uses about 24kWh per day. Compressed air tank cost scales with pressure and volume, so a tank rated to store one day of energy would presumably cost $80,000. Let’s say you install one and pay it off at 10% per year. That’s $8,000 per year. It would add an extra $0.91 to each unit of electricity. That is a lot more than the generation cost of power, even using solar energy. There may be some scale economies. We may even be able to use concrete pressure vessels in some applications. But costs would need to come down a lot for this to be considered for more than niche applications.
This is why I believe that for the most part, it will make much more sense adapting our demand pattern to an intermittent supply, rather than attempting to store intermittent energy. We will need to use it when it is there and curtail our activities when it is not. Where energy is stored, it will make more sense to store it as end use applications: hot and cold for processes, or hydrogen as a chemical feedstock, rather than something converted back into power.
The implication is that a renewable energy based society will very different to what we are accustomed to. Peoples working patterns will need to adapt to supply. An economy unwilling to adapt to this state of affairs will need to use substantial back-up generation to generate power when renewable output is too low. That is why a renewable energy economy is basically a natural gas economy with a few wind farms and solar panels installed to reduce the fuel bill. Germany is more dependant on Russian natural gas now than ever before.
GregT on Thu, 12th Jul 2018 11:21 am
“U.S. President Donald Trump, second right, gestures while speaking to NATO Secretary General Jens Stoltenberg, left, during their bilateral breakfast, Wednesday, July 11, 2018 in Brussels Belgium”
Since when do they fly American flags at breakfast meetings in Belgium?
joe on Thu, 12th Jul 2018 11:58 am
“https://en.m.wikipedia.org/wiki/European_Coal_and_Steel_Community”
NordStream2 is Germanys bid to control Russia, not the other way round. Right up to the start of ww2 Russia and Germany were trading and helping each other. With a strong economic base Russia will be strong enough to reform, or so the theory goes……..
Cloggies Paris-Berlin-Moskow line is German policy. Trump will do everything he can to stop it.
Cloggie on Thu, 12th Jul 2018 2:36 pm
Oh, let me take you by the hand
And lead you through the streets of London
http://www.dailymail.co.uk/news/article-5947587/President-Trump-departs-London-gala-dinner-Theresa-150-British-business-leaders.html
Cloggie on Thu, 12th Jul 2018 2:37 pm
Trump will do everything he can to stop it.
Won’t be good enough.
Boat on Thu, 12th Jul 2018 7:11 pm
The EU should become more dependant on Russia. Not like they have world wars. Lol. Give Russia all the countries back they lost in the collaspe. Hell Europeans don’t need freedom when they can get cheap gas. Like the Clog says…. they white to boot. Russia also has to many women because they are so rich the men pound down the vodka. So women vodka nukes and Nat gas. How could not move there. Awesome country ranking right up there with Mexico.
TurningPoint on Thu, 12th Jul 2018 9:08 pm
Russia has the world’s largest proven natural gas reserves on the planet and is the cheapest source of for Europe.
That being said, what some people on this thread seem to forget is that Trump’s policy is a continuation of Obama’s policy. Although, Obama was not as harsh as Trump, Bush 43 opposed the original Nord Stream and Obama opposed Nord Stream II, while making some of the same arguments Trump is making.
This is a stupid policy with momentum because it’s what the establishment wants.
jawagord on Thu, 12th Jul 2018 9:15 pm
Nuclear power output decreasing, gas imports increasing, Germany is the author of their own and perhaps Europes dependence on Russian gas. Merkel’s folly continues to play out. Build more nukes, use less gas!
Antius on Fri, 13th Jul 2018 9:47 am
“Nuclear power output decreasing, gas imports increasing, Germany is the author of their own and perhaps Europe’s dependence on Russian gas. Merkel’s folly continues to play out. Build more nukes, use less gas!”
Exactly. In the absence of nuclear power, the Germans must either learn to live on entirely intermittent energy, which would be enormously difficult, or use natural gas in CCGTs to balance the grid.
Ultimately, it would appear to be very counterproductive to phase out nuclear energy only to end up relying on imported gas. But this was never a decision based on very much logic.
The German economy has been somewhat insulated from the effects of its daft energy policy, thanks to its historical dominance of manufacturing industry. When you own the intellectual property that allows you to manufacture the wares of the world and export them at huge profit, you can absorb extra costs. But I doubt very much that will stretch far enough to allow industry to accommodate an unreliable electricity supply. Hence the Germans now depend on imported gas and the good will of Mr Putin. As much as I do like the guy, that is just a little bit too cosy for comfort.
When the Germans started energiewende, they should have made it clear to everyone that the biggest part of the transition involved adapting to an intermittent electricity supply for all energy needs. If that turned out to be possible without destroying productivity, then all very good. If not, then phasing dispatchable nuclear power was a really dumb idea.
BobInget on Fri, 13th Jul 2018 9:56 am
Our ‘stable genius’ simply wants to sell LNG.
BobInget on Fri, 13th Jul 2018 10:14 am
Old timers here are sick of my doomer predictions
around OPEC member Venezuela.
This may be my final post on that KEY subject;
No End In Sight For Venezuela’s Oil Crisis (Yahoo News)
Venezuela’s oil production plunged by another 47,500 barrels per day (bpd) in June, compared to a month earlier. An exodus of workers and field shut downs were reported for the month, pointing to a grim near-term future that could see total production dip below 1 million barrels per day (mb/d) by the end of the year.
According to OPEC’s secondary sources, Venezuela’s output fell to 1.34 mb/d in June, which, aside from a brief interruption of output due to a strike in 2002-2003, puts production at its lowest point in nearly seven decades.
The problems plaguing Venezuela’s oil industry are well-publicized, but the situation continued to deteriorate in June. Two officials from state-owned PDVSA told Argus that workers are fleeing operations. “More production wells are being shut down, the skilled oilfield labor force declined in all upstream divisions by at least a combined 1,000 workers in June, and scheduled maintenance continues to be postponed,” a PDVSA official from the western division said.
separate official from the eastern division told Argus that production continued to fall in the first 11 days of July as more rigs were scrapped and more wells were shut down. PDVSA is “dying operationally,” the official said.
You wouldn’t know that if you went by government statistics, however. While OPEC’s secondary sources estimated average output at 1.34 mb/d in June, the Venezuelan government reported production figures at 1.531 mb/d, flat from May levels. Those figures defy belief and are not credible, but PDVSA’s leader, Manuel Quevedo, is “cooking the official data sent to OPEC to hide the truth about [PDVSA] from president Maduro and from the public,” an official from the energy ministry told Argus.
https://finance.yahoo.com/news/no-end-sight-venezuela-oil-210000423.html
Davy on Fri, 13th Jul 2018 10:21 am
Yea bob, you claimed China and Russia were going to take over Venezuela once the country falls apart. You have claimed when the oil from Venezuela stops flowing to the US then the US will collapse. You have been talking complete nonsense on this subject for years what do you expect?
BobInget on Fri, 13th Jul 2018 10:24 am
The world is facing real shortages.
The NEXT size 14 shoe to drop will be KSA.
https://www.investorvillage.com/groups.asp?mb=19168&mn=155098&pt=msg&mid=18461321
BobInget on Fri, 13th Jul 2018 10:28 am
As for China and Russia, Davy. Here’s what
Google has to say about enezuela.
About 842,000 results (0.54 seconds)
Search Results
Venezuela’s Oil Sector May Soon Have New Owners | OilPrice.com
https://oilprice.com › Energy › Crude Oil
Apr 4, 2018 – As Venezuela’s economic crisis continues to worsen, China and Russia … Venezuela’s oil production fell by another 100,000 barrels per day (bpd) … Related: Oil Prices Head Higher On Large Crude Draw … its oil to Chinese and Russian companies if it wants to sell any oil on the international market at all.
Venezuela’s “Oil Fire Sale” To Benefit Russia, China | OilPrice.com
https://oilprice.com › Energy › Crude Oil
Aug 24, 2017 – As Venezuela rests in the brink of collapse, Russia and China are … Meanwhile, Rosneft, Russia’s largest and state-controlled oil producer, has …
China could be the new owner of Venezuela’s oil industry – Business …
http://www.businessinsider.com/china-could-be-the-new-owner-of-venezuelas-oil-industry-...
Apr 5, 2018 – Venezuelan oil production fell by another 10,000 barrels per day in … over its oil to Chinese and Russian companies if it wants to sell any oil on …
Missing: crude
Special Report: Vladimir’s Venezuela – Leveraging loans to Caracas …
https://www.reuters.com/…venezuela…oil…/special-report-vladimirs-venezuela-levera…
Aug 11, 2017 – … President Nicolas Maduro avoid a sovereign debt default or a political coup. … Russia’s growing control over Venezuelan crude gives it a stronger … For a graphic detailing the decline of Venezuela’s oil industry, see: tmsnrt.rs/2fwsuCV … faced by Chinese firms operating there, according to Venezuelan …
Russian Oil Deals Provide A Lifeline For Venezuela’s Embattled Maduro
https://www.forbes.com/…/russian-oil-deals-offer-a-lifeline-for-venezuelas-embattled-…
May 4, 2017 – Despite sitting on the world’s biggest reserves of crude oil — 300 … In repayment for loans, Venezuela sends China some 500,000 barrels per day. … Rosneft remains sanctioned for Putin’s invasion of Ukraine and Crimea.
Russia Is Beating China to Venezuela’s Oil Fields | Americas Quarterly
http://www.americasquarterly.org/content/russia-beating-china-venezuelas-oil-fields
The late Venezuelan President Hugo Chávez, had long envisioned China … Russian companies produce more oil in joint projects with PDVSA than their Chinese … delivered supplies to Georgia during the Russian invasion, Moscow accused …
Missing: crude
Venezuela falls behind on oil-for-loan deals with China, Russia
https://www.cnbc.com/…/venezuela-falls-behind-on-oil-for-loan-deals-with-china-russ…
Feb 10, 2017 – The total worth of the late cargoes to state-run Chinese and Russian firms is about … purchase about a third of the PDVSA’s total oil and fuel exports. … Venezuela was the seventh largest crude supplier to China in 2016 and the … said a trader who works at a company that regularly buys Venezuelan oil.
The Limits to Russia and China’s Support of Venezuela …
https://www.realclearworld.com/…/venezuela_maduro_chavez_russia_china_112682….
Jan 15, 2018 – Fear about Chinese and Russian influence in Venezuela is reaching new … Just as Chávez was the darling of Russia’s defense industry, Russian state-owned oil … sanctions following Russia’s occupation of Crimea have not helped. … oil, though Venezuela desperately needed to sell every drop of crude it …
Venezuela’s election, the day after: A handover of the nation’s oil …
https://theglobalamericans.org/…/venezuelas-election-day-handover-nations-oil-riches…
May 2, 2018 – “Venezuela is desperate for a new infusion of Russian and Chinese … Venezuelan oil production, at 3.5 million barrels per day when Hugo … One of the reasons that the Curaçao refinery (critical for processing Venezuelan crude oil) is … Yet such a post-election “coup” would probably not lead to the …
Sanctions on Iran and Venezuela May Empower U.S. Rivals – The …
https://www.nytimes.com/2018/05/17/…/venezuela-oil-sanctions-iran-china-russia.html
May 17, 2018 – The Trump administration is working to reduce Iran’s oil exports, and it is trying …. Chinese and Russian traders could furtively buy some Iranian crude in local … ConocoPhillips Wins $2 Billion Ruling Over Venezuelan Seizure.
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rockman on Fri, 13th Jul 2018 11:16 am
And again the obvious: regardless of any increased US LNG export capability Germany et al will buy the cheapest NG available. And it will never be US LNG…Russia will make sure of that. Nord Stream II will aid that effort.
And that’s today with low US NG prices. Low prices not likely to persist forever.
JuanP on Fri, 13th Jul 2018 7:31 pm
“China sends strategic bombers to international drill in Russia”
https://sputniknews.com/asia/201807141066336334-China-Strategic-Bombers-Drills-Russia/
I found the list of countries involved particularly interesting. They include many countries essential to the Chinese Belt and Road Initiative. These countries connect Iran, China, and Russia with each other and to both Asia and Europe. Adding Turkey, Pakistan and/or Afghanistan would create North and South roads. The idea behind the Chinese Belt and Road Initiative is pure genius, IMO. The railways are particularly impressive. I wish the USA would spend more money on better railways and less on the military.
Makati1 on Fri, 13th Jul 2018 7:41 pm
Most, if not all, previous empires went down the slippery slope to insolvency and then into war. The Us is on track to war. Will there be anything drastic enough to prevent it? We shall see. Either way. it will be very painful for Americans.