Trump Hopes To Quietly Steal Putin's Natgas Business In Europe

Tyler Durden's picture

One month ago, after the shocking collapse of the Gulf nation status quo with the announcement of the diplomatic, naval and financial blockade of Qatar by the Saudi alliance, we said that while it is unclear how this latest political fiasco plays out, one thing was certain: with Saudi Arabia and Qatar suddenly adversaries, any likelihood of a Qatari natural gas pipeline crossing Syria - the fundamental cause behind the Syria  proxy war in the first place - was gone.

But one key question remained: why would Europe vacate all hopes of an alternative provider of cheap, copious LNG and concede the role of quasi-monopolist supplier of this critical for Europe resource to Gazprom, and thus Russia whose leverage over the continent would only grow as a result.

We now have the answer: none other than Donald Trump has been hoping to "steal" Russia's European natgas relationships and clients, in hopes of making the US become the dominant supplier of LNG to Europe. According to Reuters, Trump "will use fast-growing supplies of U.S. natural gas as a political tool when he meets in Warsaw on Thursday with leaders of a dozen countries that are captive to Russia for their energy needs."

The love-but-mostly-hate relationship between Russia and Europe is familiar to regular readers: in recent years, Moscow has cut off gas shipments during pricing disputes with neighboring countries in winter months, or when the conflict with Ukraine resulted in a halt of transit shipments via the energy hub.

This is where Trump's plan kicks in: exports from the United States would help reduce their dependence on Russia. Trump will tell the group of European nations that Washington wants to help allies by making it as easy as possible for U.S. companies to ship more liquefied natural gas (LNG) to central and eastern Europe, the White House said. Trump will attend the "Three Seas" summit - so named because several of its members surround the Adriatic, Baltic and Black Seas - before the Group of 20 leading economies meet in Germany, where he is slated to meet Russian President Vladimir Putin for the first time.

Among the aims of the Three Seas project is to expand regional energy infrastructure, including LNG import terminals and gas pipelines: in other words to replace Gazprom as the dominant supplier of European nat gas with US suppliers. Members of the initiative include Poland, Austria, Hungary and Russia's neighbors Latvia and Estonia. According to James Jones, a former NATO Supreme Allied Commander, Trump's presence will give the project a lift.

While it goes without saying, Jones adds that "Increased U.S. gas exports to the region would help weaken the impact of Russia using energy as a weapon or bargaining chip."

"I think the United States can show itself as a benevolent country by exporting energy and by helping countries that don’t have adequate supplies become more self-sufficient and less dependent and less threatened," he said.  It will also, if successful, infuriate Putin and the Russian energy establishment.

Meanwhile, Trump's Russia policy is still taking shape, a process made awkward by investigations into intelligence findings that Russia tried to meddle in the 2016 U.S. presidential race. Russia denies the allegations and Trump says his team did not collude with Moscow. One thing that Trump has made clear during his campaign is that he wants to pursue ways to de-escalate tensions with Russia, however it is the deep state that prevents any such overture with yet another barrage of "Russian conspiracy" news hitting the WaPo, CNN or NYT.

And while Trump may not even realize the long-term implications of the "Three Seas" project, all those around him understand all too well: with Putin having made a Qatar gas pipeline though Syria impossible, it is up to the US to step in and replace Gazprom as Europe's nat gas provide.

Which is also why many Republican lawmakers, many of whom want to see him take a hard line on Russia because of its interference in the election and in crises in Ukraine and Syria, support using gas exports for political leverage. "It undermines the strategies of Putin and other strong men who are trying to use the light switch as an element of strategic offense," said Senator Cory Gardner, a Republican from Colorado who is on the Senate Foreign Relations Committee.

The Kremlin relies on oil and gas revenue to finance the state budget, so taking market share would hurt Moscow.

"In many ways, the LNG exports by the U.S. is the most threatening U.S. policy to Russia," said Michal Baranowski, director of the Warsaw office of think-tank the German Marshall Fund. He is absolutely correct, and yet the question becomes: if Putin was ready to deploy thousands of soldiers and dozens of warplanes in Syria to defend Russia's gas export market, what woud - or could - he do, if the US itself is hoping to replace Russia as Europe's dominant source of energy.

* * *

To be sure, taking over Russia's nat gas trade ties with European nations would be a slam dunk for the US, which is expected to become the world's third-largest exporter of LNG in 2020, just four years after starting up its first export terminal. U.S. exporters have sold most of that gas in long-term contracts, but there are still some volumes on offer, and more export projects on the drawing board.

And if there is one thing US LNG exporters want more than anything, it is a virtually unlimited export market. Such as Europe.

Cheniere Energy which opened the first U.S. LNG export terminal in 2016, delivered its first cargo to Poland in June. Five more terminals are expected to be online by 2020. Tellurian has proposed a project with a price tag of as much as $16 billion that it hopes to complete by 2022, in time to compete for long-term contracts to supply Poland that expire the same year and are held by Russian gas giant Gazprom. "We would like to be a supplier that competes for that market," Tellurian Chief Executive Meg Gentle told Reuters.

There are other problems as well: a global glut in supply may, however, limit U.S. LNG export growth, regardless of Trump's support. The glut has depressed prices and made it difficult for LNG exporters to turn a profit, said Adam Sieminski, an energy analyst with the Center for Strategic and International Studies.  Russia has the advantage in Europe due to its proximity and pipeline connections, however it is only a matter of time before technological advances make US LNG production price competitive: just ask OPEC.

"Europe is going to be the great competitive arena between Russian gas and LNG," said Daniel Yergin, the Pulitzer Prize-winning oil historian and vice-chairman with IHS Markit analysis firm.

* * *

For now, Europeans will be watching to see whether Trump clarifies his administration's position on a new notorious pipeline to pump Russian gas to Germany, known as Nord Stream 2.

As we reported several weeks ago, the U.S. Senate passed a package of sanctions on Russia, including provisions to penalize Western firms involved in the pipeline. This prompted a furious response from close European allies such as Germany, France and Austria. However, should Trump assure Europe that American nat gas is competitive with Russia's, we expect European leaders would quickly change their mind,

Once again, it should come as no surprise that the U.S. State Department has already lobbied against the Nord Stream 2 pipeline as a potential supply chokepoint that would make Europe more vulnerable to disruptions. What it really means is that if left unchecked, Nord Stream 2 would make Europe even more reliant on Moscow's good will. 

Meanwhile, as Reuters reports, the threat of sanctions adds to tensions between Washington and Berlin. Germany's government supports the pipeline, and Trump's position on it is a concern for European diplomats.

While it is soon to say if Trump will be successful in stealing Russia's European LNG business, the mere attempt will be seen by the Kremlin as an unmistakable aggression against it by the Trump admin, or those who are pulling the strings behind the scenes on the Three Seas project. And the fact that this takes place on the same day when China's patience with Trump finally ended, and Xi warned that Trump's actions since their Mar-A-Logo meeting have resulted in "negative factors" for the US-China relationship, will certainly have drastic consequences for the global balance of power and status quo, as Russia and China are drawn even closer politically to prevent the US from replacing Russia's energy dominance, leaving Moscow with a fraction of its leverage over central Europe.

But the most interesting deliverable next will be what Putin's reaction will be: should GazProm and various other Russian nat gas lose access to the European market, the consequence to the Kremlin would be far more dire than even the breakout of a small, regional, hard water. Finally, if Putin finds that no diplomatic recourse is left to preserve Russian supremacy, will the former KGB spy find a way to esalate?

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New_Meat's picture

yep, "quietly" steal

That's The Donald, all about quiet and stealthy shit

yep

back to basics's picture

Yeah, I know what you mean, real stealthy right after he tweets it.

 

As far as taking away Russia's NG dominance over Europe, good luck with that. 

 

DISCLOSURE: I voted for the mug

Bingo Hammer's picture

The truth is that Trump is a "little country in the middle east's" useful idiot/TOOL (check out the son-in-law if you're not sure)...It won't be US LNG that benefits but in fact the "little country" who is looking to usurp Russia and Gazprom....check out the Golan Heights and the Palestinian coastal waters (Leviathan I think its called) for energy sources and you will see who is waiting in the wings...Qatar was/is only a distraction...5 bombing raids in 5 days across the Golan Heights supporting ISIS terrorists last week says it all...

Yog Soggoth's picture

Shut up yesterday! Whose side are you working on (explanative)? The entire World has LPG's and you demote this? Everyone here knows that I work for the U.S.A. without getting a paycheck from the treasury. Europe needs that. We have lots of that. There is competition. Can I put my foot up your ass for a 4'th of July celebration?

GUS100CORRINA's picture

Trump Hopes To Quietly Steal Putin's Natgas Business In Europe

My response: Not quiet anymore. Artlcle has been published on ZH and now the WORLD KNOWS including RUSSIA!!!

The title is an OXYMORON!!!

giovanni_f's picture

it is ok to be exposed even to drivel, ZH is not meant to be a safe space, it is our job to do our homework. I am quite confident ZH chose to publish articles from some swamp-intern not in order to prepare itself for future legislation targeting "unbalanced" news outlets so that it can demonstrate its "fairness" but to shift some burden of analysis to us, the readers.

land_of_the_few's picture

Trump is not likely behind this scam, sorry, scheme, because the Syria breaking project started in the time of O'Bomba/Hellbitch/ShoutyOirishFarmerSam.

It will be done in the guise of "diversification of supply/competition". But really it is 100% replacement with a single more expensive source.

The *pathfinder* countries are the usual new-EU failed-Commie ones with wrecked economies and enormous emigration. So, they have not much industry left to lose to increased energy costs. Jacking up their own gas prices will accelerate the desertification, and if their voters ever find out they have done it for invites to plush MIC-sponsored Russia-hate conferences and nice salmon sandwiches, those politicians are *screwed*.

 

HRClinton's picture

The US is mitigating for the decline of the PETRO-Dollar, with the rise of the GAS-Dollar.  Got to keep the Fed's casino going.

Targeting Russia and OBOR is an integral part of it.  Anything and everything to delay or prevent the Silk Road North (via Russia) or Silk Road South (via Afghanistan, Iran, Turkey), to delay and prevent OBOR!

Cordeezy's picture

But what will his BFF Putin say about this?  How will CNN frame this if Trump is able to pull it off?

 

www.escapeamazon.com

 

Insurrexion's picture

 

Well, It's not so fucking secret now.....

Cat's outta the bag.

 

Fucking CIA moron.

BTW your fucking map still has Crimea as a part of Ukraine.

That says everything about who you are.

Schmuck Raker's picture

Oh look, the government is doing our business for us. Thank god.

FREE YOUR MARKETS, AND YOUR ASS WILL FOLLOW!

slightlyskeptical's picture

Makes no sense to ship gas across the ocean when your neighbor has all you need. Just makes it more expensive for all of us. Same thing for most of the rest of globalization. It makes sense sometimes, but for the most part it makes most goods more expensive with the logistics of moving it all around. If it didnt raise cost we should be seeing lower prices across the board. 

I hope nothing happens to end the Russian gas to Europe. 

FoggyWorld's picture

But the source quoted is Reuters.   Enough said.

swmnguy's picture

Well yeah, and also to compress it to get it to liquify, and then to safely decompress it to send it down pipelines, as opposed to just, you know, opening the valve on the pipeline that's already there, with gas in it.

Sure, fine, I don't see anything horribly wrong with selling natural gas to Europe.  Especially if the Europeans are willing to spend a whole lot more for natural gas than they do now.   I think the Europeans would be fools to rely on it, and to discontinue buying gas from Russia, and Libya through that pipeline, or to give up trying to get a pipeline built from Iran/Qatar.  

In Zbigniew Brzezinski's "The Grand Chessboard," Europe, Russia and China are the three powers in the way of US domination of Eurasia, and thereby of the world.  All three rivals must be weakened, set against each other, and broken up into smaller, more easily manipulated pieces.  For Europe and China, the US must control their access to energy.

If there's anything to this LNG rumor, that would fit the strategy.  And so would a "mysterious" and highly sophisticated "terrorist" attack on any, one, or all of the major pipelines from Russia into Europe.  It could be blamed on the Polish, Belarussian, Ukrainian or who knows, Latvian, branch of ISIS.

Idaho potato head's picture

The Latvian Amish arm of ISIS is especially deadly!

Diatom's picture

Blowing up pipelines = blowing up LNG terminals.

That is a game that murika doesn´t want to play...

Murikan LNG will never be cheaper than conventional Russian gas...

 

Yog Soggoth's picture

What in the heck are you talking aboot. They have cheaper gas. It is liquefied or not. You do not know what you are talking about. You do not even know who they are! The Europeans are dependant on this or that pipeline because of the coming cool age. Either you get on page or you lose now. Quatar gets it. Syria paid dearly for this. Brzenzski can fly a kike for all I care.

Yen Cross's picture

  Errr...emmm... I don't see Donald as the energy GURU.

  Rex Tillerson~ maybe ;-/

Dragon HAwk's picture

Because the Atlantic ocean is So narrow it won't cost anything to Haul it over there?

max_leering's picture

about 3 yrs ago, Russia signed yuuuuge nat gas deals with China... lose the EU, sell to China... easy, peasy Chinesey... more pipelines through the Motherland and Mongolia, and there it is... right in Xi's backyard... LNG from Amerika is not at all cost effective, but wait until the EUers find that out

land_of_the_few's picture

They already did find out. One of the moron small EU countries (names omitted to protect the "innocent") tried running an LNG terminal, but the only LNG supplier thet could find at short notice that was actually reliable and could really deliver what they promised was -get this - *Norway* - who aren't exactly famous for being cheap. Needless to say the prices were astronomical compared to their usual pipelines, even worse rhan the already high international LNG cost and the project lasted about 5 mins. Their neighbor countries told them to f**k off and wouldn't have anything to do with it.

It was a bit like buying your gasoline from a pharmacist like in the old days.

Radical Pragmatist's picture

Right.  The Europeans will be falling over themselves to toss their Euros to U.S. companies for hyper-priced gas products (liquification and transport) just to stick Washington's fat greasy thumb into Putin's/Russia's eye.

The Euro-weenies may be stupid, but they ain't that stupid.

P.S. Look for Trump to sell out American taxpayers yet again by using their hard earned bucks to subsidize the scam in service to his plutocrat pals.

P.P.S. Kushner and the Goldman Reptile cabal are wringing their hands in anticaptory delight as they set up their positions for the Crony play.

HowdyDoody's picture

The Euro-weenies may not be that stupid but the bought-and-paid-for Euro-weeny politicos are.

Son of Captain Nemo's picture

And even if he has it in North America, he lacks the one biggest component that Russia has that the U.S. doesn't....

A pipeline to Western Europe!

Yen Cross's picture

  That's an extremely astute comment.

 Do you think those yuuge compressed LNG tankers/ islands/transfer terminals will amount to anything?

 I'm getting ready to short the $aus.

Son of Captain Nemo's picture

Yen

The amount of time, expense and yes "energy" to get it there via LNG tanker will put the U.S. energy producers bleeding out of every orifice in terms of cost and "they know it"!...

Harkens the announcement 2 years ago when Biden & Son aided and abetted the looting operation in Ukraine only to find that the Western Europeans didn't "need" or "want" the re-routing and the time and expense it would translate to in the final price!

Doom and Dust's picture

So let's say the US pays a strategic premium to make EU energy-dependent and destroy Russia.

How much premium would be 'worth' it? Could it be the final straw for the Evil Empire?

Like Star Wars Russian edition

 

 

Son of Captain Nemo's picture

"So let's say the US pays a strategic premium to make EU energy-dependent and destroy Russia."

Won't be much of a need to nat gas, or for that matter any other fossil fuels should that one play out...

But rest assured. The psychopaths that control "Cheeto-in-Chief" along with the rest of the "peanut gallery" in Washington are biting their nails to the quick contemplating the permutations every days since 9/11 of what those scenarios will look like when they play out.

Needless to say...

You and I won't be around to see that "party" come to fruition. And speaking for myself, I certainly hope I'm not alive after that "hangover" gets underway!

Snout the First's picture

The gas isn't compressed. Its chilled to be liquified. Expensive to liquify at our end. The specialty tankers are hideously expensive to build. I don't see how LNG transport can compete against pipelines.

HowdyDoody's picture

Your fundamental mistake? You are thinking practical economics. They are thinking politics.

ds's picture

A whole new industry sprouting called "LNG carriers". How economical can a pipeline be snaking through mini war zones ? There is also demand for LNG carriers from Qatar to Iran. Globalist interests prevail. Soverign nations are also their chess pieces albeit some more difficult to manipulate. 

Son of Captain Nemo's picture

You means the amount of money $$$ to pay for war so that the LNG tanker can be the ONLY "game in town" to the vassal(s) that are paying a far higher price in not only the cost of the gas but the terrorists among the refugees Washington/Tel Aviv and London are delivery to there doorstep(s) using it as a means to coerce them into more involvement in Syria, Iraq, Libya and Afghanistan?...

Either it's the stupidest comment on the this read? Or you forgot the /s!

BlindMonkey's picture

I've not seeen current numbers but isn't LNG multiples of the cost of pipeline NatGas?  

 

Buying artifically high supply doesn't seem like a winning strategy.

Peak Finance's picture

Takes energy to comnpress it to liquid

Takes energy to pump it into ships

Takes energy to move the LNG via ship to destination

A LNG tanker is like a big nuclear bomb on the water, more LNG tankers floating around, more chance of major accident.   

Idaho potato head's picture

I have experiance in winter heating with both propane and natural gas. I wonder if europe will learn as fast as I did which is cheaper.....

BlindMonkey's picture

When I was on the submarines, the LNG tankers were my favorite hypothetical "target". I can only imagine the boom that would make.

Omen IV's picture

The entire LNG boondogle will be done within 5 years - Russia has endless supply - cheap

US has temporary surplus which is expensive for all the reasons you outlined plus LNG from Australian / Qatar  /  Iran  - etc

The Russians are not afraid

 

Obama and Clinton fucked up  big time  in the ME and Ukraine - no recovery possible  -  lots of debt to show for it

Schmuck Raker's picture

"German Marshall Fund"

Why hasn't that been rolled-up by now? To give opinions?

http://www.gmfus.org/sites/default/files/styles/hero_header/public/homep...

(They got cool friends, I guess)

Reaper's picture

What would this do to the price of NG in this country? The present projected price in Europe ignores the reality that large European demand would cause US NG prices to be much higher. Also, Europe would have to pay for transportation and transportation facilities.

No intelligent thinking; only, Russia-phobia emoting.

Peak Finance's picture

It's a "PIPE" Dream

LNG shiped overseas would never be competitive in price to the stuff piped in Direct from Russia

I am not talking my book either, I am really long LNG

Dragon HAwk's picture

Gosh somebody should invent a nice small portable NG heater you can put in your window, like a window Ac unit, for winter time,  here in America..oh wait that would cut into the Oil Companies profits.

GestaltNine's picture

Indonesia is a pretty big player in natural gas 

It seems like a lot of countries are either discovering or finally exploiting their own natural gas supplies so this market might not be much of a profit maker for anybody 

CEOoftheSOFA's picture

LNG can't compete with pipeline gas.  If it could, Qatar and Saudi wouldn't need a pipeline.

sinbad2's picture

Europe was going to get diversity of supply, via the Iranian pipeline, the pipeline the US tried to stop in Syria.

Also will the US sell LNG to Europe for the same price as piped gas?

The US is trying to get a monopoly over gas supplies to Europe, and Germany and Austria have told the US to fuck off.

land_of_the_few's picture

Also, LNG already exists on the international market. Anyone can buy if they want. Any player who has gas can potentially become  an LNG supplier, too.

indaknow's picture

Not going to happen.  Makes no sense economically. 

erk's picture

What a load of crap, for starters the US has just over 5% of the worlds natural gas reserves, that means 95% is in other countries most of which are closer to Europe than the US is. Secondly LNG costs a bucket load to compress and transport compared to a pipeline.

 

milking institute's picture

Yeah,sounds like your typical Reuters propaganda piece. allways question anything with that name attached to it.

Doom and Dust's picture

Weaponized shale gas. Knew this day would come. Why else keep that scam going.

Poland as usual the wedge to stop Nord Stream 2, i.e. EU-Russian alliance.

Next step could see trouble in the Baltics.

land_of_the_few's picture

Well, Biden junior was already heading to that part of the EU market to see if he could f**k it up and screw over the locals. Too sketchy an operative even for the Ukis?

He seems eminently qualified for that role - Bolivian marching powder, kicked out of plush navy job, insane hubris.

The key is to bamboozle or bribe the local Pols and hoodwink the population...gas supply "competition". Just not competing on *cost*,  natch.