American Gas to the Rescue? The Impact of US LNG Exports on European Security and Russian Foreign Policy

DESCRIPTION: As Western governments have responded to Russia’s continued efforts to destabilize Ukraine, the potential for US natural gas exports to inflict economic pain on Moscow and undermine its influence in Europe have made for some eye-catching headlines. To cut through the hyperbole surrounding this issue, the authors undertook a study that provides a cool-headed examination of the impact of US LNG exports on European energy security and Russian foreign policy.

OUTCOMES: The key findings include:
• The US shale gas boom has already helped European consumers and hurt Russian producers by expanding global gas supply and freeing up liquefied natural gas (LNG) shipments previously planned for the US market.
• Over the long term, US exports, along with growth in LNG supply from other countries such as Australia, will create a larger, more liquid and more diverse global gas market.
• While there are important longer-term benefits for Europe from US LNG exports, they are not a solution to the current crisis. Those terminals already approved will not be online for several years.
• Although US LNG exports increase Europe’s bargaining position, they will not free Europe from Russian gas.
• By forcing state-run Gazprom to reduce prices to remain competitive in the European market, US LNG exports could have a meaningful impact on total Russian gas export revenue.