State Dept. Official Sees Bright Future for US LNG Exports
U.S. liquified natural gas export capacity will grow by about half over the next few years as countries increasingly turn away from Russian energy supplies, Geoffrey Pyatt, the State Department’s assistant secretary for energy resources, said last week. Pyatt predicted Russia will “never” recover its share of the global energy market and the transition away from Russian fuel will ultimately benefit U.S. and allied traders, including those operating in the emerging renewable energy sector.
“We've passed the moment of peak Russia,” Pyatt said during an event hosted by the Center for Strategic and International Studies, adding that 2021 was the “moment of Russia's highest fossil fuel revenues. It will never recover the status that it had as a reliable energy supplier to world markets.”
He said Russia has “demonstrated to everybody that it is not reliable” and thinks the European Union is on an irreversible path to abandoning Russian energy altogether. “I think decoupling between Europe and Russia energy supplies is real and now permanent,” Pyatt said. “Nobody in Europe will ever again suggest that Russia could be a reliable energy supplier.”
Since the start of Russia’s war in Ukraine, the U.S. has been working to convince allies to stop importing Russian energy, an effort that has included a U.S.-EU initiative launched in March aimed at reducing European reliance on Russian fuel (see 2203250035). As part of the initiative, the U.S. agreed to supply Europe with more LNG.
Pyatt said the effort has so far been successful. “The United States has significantly overfulfilled our promise to help Europe find 15 [billion cubic meters] extra in LNG volumes this year,” he said, adding that 2022 “is going to be remembered as the year when the United States became the largest LNG exporter in the world.”
Although increased U.S. LNG exports are “keeping the lights on with allied countries and preventing an energy crisis,” they have also come with certain "tensions," said Joseph Majkut, director of CSIS’s emerging security and climate change program. “It's been very costly for European allies to buy off of the global LNG market all the gas they need,” he said, adding that it’s also “not clear how to build enough capacity, both export capacity here in the U.S. as well as maybe some import capacity in Europe, in a way that's consistent with European climate goals.”
A senior U.S. official in April said America’s LNG export infrastructure was running at “max capacity” and struggling to keep up with demand (see 2204260060). Pyatt said he expects U.S. export capacity to “grow by about 50%” by 2025, but he acknowledges that the transition away from Russia has been challenging.
“The challenge is, again, that Russia was this major supplier to international markets,” Pyatt said. The U.S. needs “to help countries manage the shock that their economies have received because of what Russia has done, because of its weaponization of its energy resources.”
Pyatt said he plans to visit Asia after Thanksgiving, starting with Japan and South Korea, to discuss energy trade issues. He also plans to visit India next year, which he said is “one of the few countries in the world that has a good shot to challenge the monopoly that China has sought to achieve in certain key aspects of the global energy supply chain.”
Although India is still buying Russian oil, Pyatt said more U.S. trade partners are recognizing that Russia isn’t a reliable trade partner. “By the end of the decade, Russia’s fossil fuel revenues will be down by about 50%,” he said, “which is an extraordinary shift of fortunes.”