For Russian President Vladimir Putin, the annexation of Crimea isn’t just a land grab; it’s an energy grab.
Indeed, it wasn’t long after rejoining the Russian Federation that the Crimean legislature voted to seize the oil and gas assets of several Ukrainian companies. Hydrocarbon reserves throughout the Black Sea have also been nationalized. It’s easy to understand why: the more energy resources Russia controls, the greater Putin’s political power — especially since Europe’s economy relies heavily on Russian oil and gas.
In order for the West to effectively check Putin’s illegitimate expansion, Europe needs to break its dependence on Russian energy. The United States can facilitate this process by acting quickly to boost energy exports to Europe and, specifically, by loosening restrictions on natural gas exports.
So far the sanctions against Russia put in place by the U.S. and European Union have been fairly limited. These include freezing the assets and restricting the travel of several Ukrainian and Russian officials.
Since these policies were enacted, Western leaders have made clear that tougher economic sanctions may be on the way. As President Obama said during his recent European trip, “if Russia continues on its current course … the isolation will deepen, sanctions will increase and there will be more consequences for the Russian economy.”
The major impediment to imposing harsher sanctions, however, has been Europe’s dependence on Russian energy. Without oil and gas imports from Russia, European countries would be hard pressed to heat their buildings or light their cities. In the case of natural gas, Denmark and the Netherlands are the only European countries that produce more of the resource than they consume. This heavy reliance on Russian energy imports makes it difficult for the EU to impose serious economic or trade sanctions on the country.
As he has shown in the past, Putin is more than willing to use his country’s energy resources as a political weapon. In 2009, for example, Russia cut off gas supplies to Europe, in part to retaliate for Ukraine’s seeking membership in the North Atlantic Treaty Organization.
The Crimean government has only added to Russia’s oil and gas supplies by nationalizing the assets of Ukrainian companies Chernomorneftegaz and Ukrtransgaz. With the acquisition of the peninsula, Putin has also gained access to the deep-water natural gas reserves in the Black Sea shelf, which could total as much as 14 trillion cubic meters.
Unchecked by Western pressure, it’s possible that Russia will continue to seize energy resources throughout the region in its attempt to become a global petro-oligarchy. Avoiding this future will require Europe to free itself of its dependence on Russian energy.
On this front, the U.S. has a significant role to play. Thanks to the shale-gas revolution, the U.S. surpassed Russia as the world’s top natural-gas producer in 2009. Increasing exports of newly abundant liquefied natural gas (LNG) to Europe will help diversify the region’s energy markets, hurting Russia’s political influence in the process.
In fact, a recent EU-U.S. joint statement identified the importance of LNG trade. “We welcome the prospect of U.S. LNG exports in the future,” it stated, “since additional global supplies will benefit Europe and other strategic partners.” Expanding LNG sales in Europe, however, will require lawmakers to rethink the existing policies governing energy exports.
Under the current system, American LNG producers hoping to sell to countries that lack a free-trade agreement with the U.S. must seek approval from the Energy Department. Only a handful of export projects have gotten the go-ahead from the DOE. Right now, more than 20 proposals are under review, some of which have been languishing for years.
Thankfully, the DOE’s sluggish approval process may soon get the overhaul it needs. The House Energy Committee has considered eliminating the requirement for government approval on gas exports to all countries in the World Trade Organization. The measure is precisely the kind of reform that the Crimea crisis calls for.
LNG isn’t the only resource the U.S. has to offer; according to some estimates, it will lead the world in oil production by next year. Any strategy for expanding energy exports to Europe, therefore, should also include refined oil.
As Senate Energy Committee Chairwoman Mary Landrieu said this spring, “the last thing Putin and his cronies want is competition from the United States of America in the energy race.”
She’s right. For too long, the Russian president has used his country’s resource advantage to strong-arm the global community. By exporting more oil and gas to Europe, the U.S. is in a unique position to take away Putin’s biggest geopolitical weapon.
Chris Faulkner is CEO of Breitling Energy Corporation.Thinking of submitting an op-ed to the Washington Examiner? Be sure to read our guidelines on submissions for editorials, available at this link.
