U.S. sanctions on Russia could backfire for President Trump’s energy dominance agenda by placing constraints on U.S. shale gas exports to Europe, according to a think tank’s report released Thursday.
The new report from the Washington-based Atlantic Council concludes that sanctions against Russia “have not necessarily met their mark” in slowing Russian oil and natural gas production. “Even when combined with low oil prices, sanctions have yet to deter Russian oil production growth at home and investment abroad.”
Specifically, the sanctions could backfire on Trump’s push to ship more U.S. liquefied natural gas to European ports by making it harder for American energy shipments to use regional gas pipelines that are dominated by Russian companies.
“Russian control of European pipelines could include impeding the distribution of US LNG exports from LNG receiving terminals in Europe,” the report said. “Southeast Europe already has a dearth of capacity to import LNG, and countries including Bulgaria, Romania, Ukraine, Moldova, Slovakia, Hungary, and the Balkans are in danger of lacking pipeline connections that can feed them adequate supplies of non-Russian gas in an emergency.”
The think tank found that although American LNG exports are growing rapidly, “Russian aggressiveness in marketing pipeline gas and the low prices in Europe may keep US LNG exports to Europe at a low level.”
The report shows how sanctions imposed under the Obama and Trump administrations have failed to suppress Russian oil and natural gas growth for several reasons. The low oil prices that began three years ago as the result of a global supply glut has had a more profound effect on Russian energy than U.S. and European Union sanctions.
“Indeed, lower oil prices have hurt Russian energy sector revenues much more than sanctions have,” the report states. “However, that is not to say that sanctions have not had an impact. Sanctions have dramatically reduced the equity value of Russian energy firms, made borrowing for energy projects more difficult, and sharply reduced the value of Russia’s currency.”
