AJOT Digital Edition
Issue #590 | Perishables | Mediterranean | Middle East | Africa Trade

Cover of issue-590.png

Peroshables

Mediterranean | Middle East | Africa Trade

View Issue #590 Now!

2014 Media Kit
  • Share this article:

EU struggles to convince U.S. to export gas under trade pact

By: | at 12:26 PM | International Trade  

The European Union has yet to convince Washington to commit to exporting U.S. gas under a transatlantic trade deal despite two days of talks on the issue, highlighting the challenges Europe faces to reduce its reliance on Russian energy.

Tension between Russia and the West over the future of Ukraine is spurring the European Union to renew efforts to end decades of dependence on Russian gas. One solution would be greater access to abundant U.S. resources.

But the United States is wary because more exports could push up the price of gas at home, a politically sensitive issue.

“We held two full days of discussions on the issue of including chapters on energy and raw materials,” the European Union’s chief negotiator Ignacio Garcia Bercero told a news conference after the fourth round of talks towards the Transatlantic Trade and Investment Partnership (TTIP).

“The discussions have been positive, constructive, but we have not reached a point where we can say that both partners have identified that a chapter is the way forward,” he said, referring to EU demands for a clear text in the pact that would guarantee U.S. gas exports.

EU leaders have put cutting reliance on Russian gas at the top of their two-day summit in Brussels from next Thursday.

Ukraine is an important transit route for shipping Russian gas by pipeline to the EU, which relies on Moscow for about a third of its supplies. Past supply disruption because of pricing disputes between Moscow and Kiev had already motivated EU leaders to seek alternatives to Russian gas.

ASIAN MARKET MORE LUCRATIVE

Washington’s chief negotiator in the talks, Dan Mullaney, said the United States had not rejected the idea of exporting to the European Union, but sounded a cautious note.

“Clearly the TTIP offers opportunities for the liberalisation of trade in energy,” Mullaney said. “Of course, whether or not these sales materialise depend on private actors and international pricing,” he said.

Asia is for now a more lucrative export market for U.S. liquefied natural gas (LNG)

Gas is just one issue in a transatlantic deal encompassing half the world’s economic output in the hope that an accord can bring gains of around $100 billion a year for both sides.

If agreed, that would be the world’s biggest trade deal.

But the Ukraine crisis is intensifying the EU’s focus on diversifying energy sources to reduce exposure to risk in those eastern EU member states that rely most on Russia’s gas.

“It is a very important issue for us,” Garcia Bercero said when asked about the need for U.S. gas in the context of growing tensions with Russia.

The United States has a ban on exporting crude oil and natural gas without a licence. While an EU-U.S. trade accord would make licence approval automatic, the Europeans want a detailed chapter in the pact that lays out the U.S. commitments, hoping to make supply more secure.

Given the difficulties, EU trade chief Karel De Gucht sought to play down expectations, telling Belgian lawmakers on Wednesday that U.S. exports would not be a ‘miracle solution’ to Europe’s energy needs.

“The price is less in the United States, but with transport across the Atlantic that would at least double,” he said.

Negotiators plan to hold a fifth round of talks in the middle of the year, although trade is expected to be a central part of an EU-U.S. summit on March 26. (Reporting by Robin Emmott and Philip Blenkinsop; Editing by Tom Heneghan)