American LNG carrier docks in former Soviet state

[IsailedawayfromFR]

The battle of Lexington wasn’t much of a battle, really; it was a minor scuffle with just a few casualties. There were as many curious spectators as there were militiamen. And yet it led to the American Revolution.

In the same way, the ship that docked last week at a Lithuanian port with a cargo of liquefied natural gas doesn’t seem like a big deal. It’s just one tanker, sailing out of the Sabine Pass and into the Baltic.

But it could spark its own revolution. It’s the first tanker of American LNG to reach the former Soviet Union, easing Lithuania’s dependence on Russia for its fuel.


“While the quantity of gas sold was minor, the shipment symbolized dramatic shifts in the worldwide energy market with the potential to influence geopolitics by reducing Russia’s ability to manipulate energy access to exert influence over its neighbors,” reports Erin Mundahl for Inside Sources. “Although the initial shipment was primarily of symbolic impact, officials in Lithuania were clear about the message they were trying to send.”


As one official told Reuters, “We want to cement our relationship with the United States in many aspects in addition to defense and security - energy trade is one of the strategic areas for cooperation.”

It’s beginning to make a dent in Russia’s sphere of economic influence.


“The [Lithuanian] government estimates it will import half of its gas consumption in 2017 as LNG, mostly from Norway’s Statoil,” Reuters reports. “The rest will be imported via a gas pipeline from Russia. In June, Lithuanian state-owned trader Lietuvos Duju Tiekimas signed a deal with a unit of U.S. firm Cheniere Energy, its first direct import of LNG from the United States.”

That ship docked on Monday. What made all of this possible? The shale revolution and hydraulic fracturing.

“Fracking has paid off dramatically in terms of cheap energy in the U.S.,” Mundahl explains. “Abundant natural gas has lowered electricity prices and helped spur the development of major chemical plants in places like Ohio and Louisiana. The next stage for the industry has been the export market, which so far has focused on Canada and Mexico. As the industry continues to expand, shipment companies are looking further afield, to Latin America and beyond. Now the technology has also lowered natural gas prices to prices competitive with Russian ones even after shipping costs are included. American domestic energy production, in conjunction with the 2008 recession, dramatically lowered energy prices and, as a result, took a large bite out of the Russian government’s finances.”

Russia hasn’t been above using its near-monopoly as a weapon.

“In 2009, Russia memorably shut off gas supplies to Ukraine for two weeks in the dead of winter after the two countries had a disagreement over prices,” Mundahl notes. “Faced with freezing temperatures, Ukraine was forced to accept the increase.”
http://www.tylerpaper.com/TP-Opinion/299185/editorial-american-lng-carrier-docks-in-former-soviet-state