Authored by Tsvetana Paraskova via Oilprice.com,

As American LNG costs continue to fall, and as Europe looks to untangle itself from Gazprom, U.S. liquefied natural gas (LNG) exports are quickly becoming a welcome alternative to Russian gas supplies. The United States is all too happy to help Europe increase its energy security by diversifying its natural gas supplies – in which Gazprom holds more than a third of the market.

These were the key messages from U.S. officials and LNG developers at this week’s gas conference in Berlin.

Germany is the end-point of the controversial Gazprom-led Nord Stream 2 pipeline project, which will follow the existing Nord Stream natural gas pipeline between Russia and Germany via the Baltic Sea. The U.S. opposes the project, as do EU institutions and some EU members such as Poland and Lithuania. Germany, however, supports Nord Stream 2 and sees the project as a private commercial venture that will help it to meet rising natural gas demand.

At the conference this week, Woodward Clark Price, Minister-Counselor for Economic Affairs at the U.S. embassy in Berlin, said that U.S. LNG is becoming increasingly competitive, due to continuously falling costs.

“US LNG will become even more cost-competitive and attractive. We are confident US LNG can compete [in Europe] — even on price,” S&P Global Platts quoted Price as saying at the event.

Lower pipeline gas price compared to LNG has long been Russia and Gazprom’s key selling point. 

The U.S. is ready to help Europe to diversify its energy supply, Price noted.

“We want to enhance a more secure energy situation in Europe so that no one country or corporation can disproportionately influence Europe,” Price said, in an obvious reference to Russia and Gazprom.

U.S. LNG benefits from low-cost shale gas at home, flexible capital markets, and reduced liquefaction costs said Tom Earl, chief commercial officer at LNG developer Venture Global, which expects to make a final investment decision on its Calcasieu Pass LNG project in Cameron Parish, Louisiana, in early 2019.

Paul Corcoran, CFO at the Nord Stream 2 gas pipeline operating company, said that pipeline gas is cheaper than LNG and due to this, 75 percent of Europe’s LNG import capacity stays unutilized.

“Russian gas is still very well placed against US LNG,” Corcoran said at the Berlin conference.

At the same time in which Nord Stream 2 and U.S. LNG executives discussed the competitiveness of gas supplies to Europe, some 300 miles east of Berlin in Poland’s capital, Warsaw, U.S. Secretary of Energy Rick Perry was witnessing the signing of a 24-year LNG deal under which U.S. Cheniere will deliver growing volumes of LNG to Poland’s PGNiG.

“American energy is empowering Europe and diversifying markets,” Secretary Perry said.

Poland, one of the most vocal opponents of Nord Stream 2 and Russia’s dominance on the European gas market, will start importing regular supplies from the United States as early as next year.

“The share of LNG in our import portfolio is constantly increasing. The world’s liquefied natural gas market is rapidly growing and allows us to select the best offers in this area,” Piotr Wozniak, President of the Management Board of PGNiG, said in a statement. At the news conference after the signing of the deal, he said, as quoted by Platts:

“We will sign different contracts for LNG with US companies, they all have one thing in common, they are 20%-30% cheaper than the currently purchased gas from Russia.”

During Secretary Perry’s visit to Warsaw, Poland’s energy ministry and the U.S. Department of Energy also signed a joint declaration vowing to support the development of gas infrastructure alternative to Russian supplies, and to “promote market diversity through decreasing reliance upon dominant suppliers in Central and Eastern Europe and working together to counter politically driven projects, which are aimed to use energy as a means of political and economic coercion, such as Nord Stream 2 and the second line of TurkStream; and to ensure continuity of robust supply and transit of natural gas in Ukraine and other Central Eastern European nations.”

In the readout of Secretary Perry’s visit to Warsaw, the Department of Energy said, commenting on Cheniere’s long-term LNG supply deal:

“This contract is one of several that builds on the desire of Poland to diversify their sources of energy, and the effort of the Trump Administration to expand U.S. LNG abroad as an alternative to Russian gas.”

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