Center for Strategic Communication

ASP CEO BGen Stephen Cheney, USMC (Ret.)

ASP CEO BGen Stephen Cheney, USMC (Ret.)

On April 16, the American Security Project hosted an event on liquefied natural gas (LNG) exports entitled, “The Geopolitical Implications of U.S. Natural Gas Exports.” The panel included Marik String,  former Deputy Chief Counselor for the Senate Foreign Relations Committee; Toshi Okuya, Director of the Japanese External Trade Organization (JETRO); and Peter Mollema, Deputy Chief of Mission for the Embassy of the Netherlands.

Marik String provided some initial context. With the shale gas “revolution,” natural gas prices have reached historic lows in recent years due to a surge in production. Low prices have sparked a debate within the United States about what to do with the glut of supply. High prices for LNG in Europe and Asia create an opportunity for the U.S. to take advantage of what is seemingly an easy arbitrage opportunity.

Marik String

Marik String

Currently, the U.S. can export to countries with which it has a free-trade agreement. Proponents of liberalizing LNG trade argue that exports will be a boon for the economy. Opponents criticize this idea for the potential negative impact on consumers from higher prices. However, the debate has lacked a focus on the geopolitics.

String noted that while the U.S. has hitherto limited LNG exports, the U.S. shale gas “revolution” has nonetheless had significant geopolitical effects already. Qatar had ambitious plans to export LNG to the U.S., but essentially rerouted it to Europe after U.S. import demand vanished. This has given Europe more options. Before the U.S. has even decided on the LNG exports question, shale gas production has already had an impact.

String listed two main effects more U.S. LNG exports would have: effects on dependency and prices. For U.S. allies in Europe and Eurasia, more exports would reduce Turkey’s dependence on Iran for natural gas, for instance. Turkey depends on Iran for about 20% of its natural gas, and Turkey is becoming worried that its rising dependency puts its economy at risk to potential international sanctions on Iran’s natural gas industry.

For Central Europe, String explained, natural gas imports are at times, “an existential question.” With overwhelming dependency on Russia for energy, supply disruptions imperil their economies. Several nations have plans to build new LNG import facilities to diversify away from Russia. The other effect is on prices. More U.S. LNG entering the market would put downward pressure on prices, easing the burden for importers in Europe and Asia.  A more liquid market with additional energy suppliers would also give American allies enhanced leverage in negotiations.

Toshi Okuya

Toshi Okuya

Next up was Toshi Okuya, Director of JETRO. He mentioned that Japan experienced its first trade deficit in three decades in 2011, largely due to a surge in imports for fuel after shutting down all but two of its 54 nuclear reactors. Japan is burning more LNG, coal, and oil to make up for the shortfall. He unequivocally stated that U.S. LNG exports would be a huge help to Japan’s economy and energy security.

Okuya emphasized a big problem for Japan is the oil-linked pricing contracts for natural gas, which make natural gas significantly more expensive in Asia. He praised the Henry Hub spot market that exists in the U.S., which does not link natural gas to oil. “We need to introduce this pricing system in Asia,” he stated, noting that more U.S. LNG exports could create the conditions for that transition.

Lastly, the Deputy Chief of Mission for the Embassy of the Netherlands, Peter Mollema, gave the Dutch and European perspective. Mollema said that while the economics of large quantities of LNG exports from the U.S. are questionable, if they move forward the Netherlands would be a key destination. The port of Rotterdam, as a gateway to Europe, imports a large amount of hydrocarbons already, and the Netherlands is seeking to establish itself as the “gas hub” for Europe.

Peter Mollema

Peter Mollema

Noting that “European security” is best served when all of Europe speaks with one voice, he emphasized the leverage that greater U.S. LNG would provide Europe in dealing with energy negotiations, particularly with Russia.

Finally, the climate question arose during the Q&A session. Greater use of natural gas has the potential to displace dirtier fuels. More U.S. LNG could allow Japan to use relatively less coal and oil for electricity. However, as Peter Mollema noted, natural gas is still a fossil fuel, and is not a long-term climate change solution.

The speakers provided a great discussion and the topic is timely. Whether or not the U.S. decides to allow more LNG exports depends on the Obama administration, specifically the Department of Energy. Hopefully, when making that decision, policymakers will consider the geopolitical implications discussed at today’s event.


Click below to listen to the event:











LNG event 1
LNG event 2
LNG event 6
LNG event 7
LNG event 8
LNG event 3
LNG event 4
LNG event 5

The Geopolitical Implications of U.S. Natural Gas Exports, a set on Flickr


To read ASP’s report on the same topic, “The Geopolitical Implications of U.S. Natural Gas Exports,” click here.


The Geopolitical Implications of U.S. Natural Gas Exports by The American Security Project