Energy diplomacy: why the US President travels to Poland

The US President Donald trump on 5 July sent in his second over six months overseas tour. A key issue will be the involvement of trump in the G20 summit in Hamburg on 7-8 July. The President will also hold separate meetings there with the world leaders: to be held and his first meeting with Vladimir Putin, and the talks with President of China XI Jinping.

In Hamburg trump will arrive from Warsaw, where, on 6 July, will hold a meeting with the Polish President Andrzej Duda and heads of 11 other countries in Central and Eastern Europe at the summit “Initiative of the three seas” — a new negotiating format of the Eastern countries of the European Union.

Poland will become the seventh country visited trump for the presidency in may, he visited Saudi Arabia, Israel, Palestinian authority, Italy, the Vatican and Belgium. In Paris he was waiting for 14 July on the celebrations of Bastille Day, a visit to London is tentatively scheduled for October.

Putting Poland ahead of key European allies — Britain, Germany and France, trump repeats the decision of George W. Bush, who in June 2001 also started the first European tour with Warsaw and then visited the capitals of the leading EU countries.

Abroad will help them

The purpose of trump’s negotiations with the leaders of the countries before the vast majority were part of the Soviet zone of influence, — the development of allied relations, cultural relations, discussing issues of terrorism, trade, energy and environment, finally, the development of a common approach to the policy of Russia, adviser to the us President for national security Herbert McMaster. At the summit “Initiative of the three seas” trump, according to McMaster, will speak about the development of cooperation in the field of infrastructure and energy. In the first place, says the Advisor to the President, we will focus on expanding the supply of liquefied natural gas (LNG) from the US to Poland.

As previously mentioned, the acting special envoy and coordinator for energy resources the U.S. Department of state Mary Warlick, energy security in Europe is one of the main priorities for Washington, since many EU countries are dependent on one supplier — Russia. According to Warlick, 45% of gas in 2015, Europe is imported from Russia, from 13 European countries in the same year deliveries of Russian gas amounted to 75% of the total.

In early June, the Polish LNG terminal in świnoujście received the first U.S. LNG carrier Clean Ocean. It can hold up to 162 thousand cubic meters of LNG, which corresponds to a volume of about 95 million cubic meters after regasification. The maximum amount of processing LNG to the Polish terminal is 5 billion cubic meters per year.

What are the “Initiatives of the three seas”

“The summit of the Initiative of the three seas” is a continuation of the initiatives proposed at the meeting of leaders of 12 EU countries in August 2016 in the Croatian Dubrovnik. It involves the Baltic States (Estonia, Latvia, Lithuania), Visegrad group (Poland, Hungary, the Czech Republic, Slovakia), Eastern Balkans (Bulgaria, Romania) and Slovenia, Croatia and Austria.

The organizer of the Union were representatives of Croatia and Poland. In the Declaration of the inaugural meeting was focused on strengthening cooperation in the field of energy, transport and digital economy. “Adriatic, Baltic and black sea is the vital artery of Europe. The region represents 28% of the territory of the EU, 22% of the population, but only 10% of GDP. For development of the region requires about €50 billion of investment,” — said the President of Croatia Kolinda Grabar-Kitarovic.

According to the statistical Yearbook of BP gas consumption in Poland in 2016 reached 17.3 billion CBM. That is one American supply will provide about 0.5% of the annual needs of the country. Two lines passing through the neighborhood of the gas pipeline “Nord stream” is able to pass from Russia to Germany and further into Europe to 55 billion cubic meters annually.

It is the countries of Central and Eastern Europe most strongly dependent on Russian gas. Poland Russia last year set, according to BP, 10.2 billion cubic meters of gas (according to “Gazprom”, even more — nearly 11.1 billion cubic meters).

The average dependence of the 12 countries participating in the summit “Initiative of the three seas” from Russian gas is 50-60%. In Romania, the Russian delivery is about 14% of consumption in Bulgaria and Estonia, this figure reaches 100%.

Polish diplomatic source Foreign Policy magazine explained that diversification of imports is a priority of energy policy for Eastern Europe: countries fear Moscow’s attempts to use the supply as an instrument of pressure. “The passage of the first American tanker — it is an important point. Russia will have to revise its strategy and tactics, recognizing US powerful new force in the European gas market”, — said the interlocutor of the edition.

Russian analysts closely monitor commercial issues to be discussed these days in Poland during a visit to trump, told journalists at a briefing the press Secretary of the President of Russia Dmitry Peskov.

The competition factor

On Monday, Reuters reported that during a visit to Warsaw trump plans to coordinate the facilitation of supplies of American LNG to Eastern Europe, using it as a “political tool” in the confrontation with Moscow.

According to the head of programme, Moscow Carnegie center Andrey Kolesnikov, the emphasis of the new American administration to Poland is aimed not so much to help her and her neighbors to deal with energy dependence on Moscow, how to form an Alliance with them to bypass Western European leaders of the EU. Mistrust, misunderstanding and criticism from liberals in Western Europe trump intends to oppose friendship with the “new” EU countries, said Kolesnikov. In many of them the government headed by right-wing populists, who themselves are in tension with Brussels. This primarily Poland and Hungary, over which hangs the threat of European sanctions because of the “undemocratic” government policies.

In the Kremlin are following the news coming from Eastern Europe, given in Hamburg the upcoming meeting of the presidents of Russia and the United States, said the press Secretary of the Kremlin Dmitry Peskov. The view that his visit trump is trying to gain influence over the Eastern bloc, Peskov called “political exercise”.

At the moment, as the BP Yearbook, the United States remains a net importer of natural gas. The country’s self-sufficiency fuels is gradually increasing: in 2016, the production of gas in the US was 96% of total consumption, ten years ago the figure was only 85%.

The export of LNG from the United States, according to official data, was for many years at levels below 100 million cubic meters per month (in natural terms), but in the spring of 2016 began a sharp rise in sales. It was caused by the lifting of the ban on energy exports, and then in April 2016, us companies have begun supplying LNG to Europe.

By August, reaching almost 800 million cubic meters of monthly exports, in autumn the volume of supply has fallen off, but in the winter they began to rise again. In April 2017, the United States sold abroad in liquefied form 1.4 billion cubic meters of gas.

However, even in the arrangement on annual sales volumes increased U.S. exports is still only 2-3% of the global trade of LNG in 2016 the market volume reached 347 billion cubic meters As noted in the study, The Wall Street Journal, the main advantage of the American gas — it creates competition, “exporting” for a low price.

According to experts of the analytical Agency Platts, LNG deliveries to the terminal in Swinoujscie from Qatar, Norway, and now the United States will be useful to Polish business partner of Gazprom — PGNiG to strengthen the negotiating position on price before the contract extension, expiring in 2022.

At the same time, Platts predicts a glut in the global LNG market in 2017, so the arrival of tankers from Louisiana to Poland, and later in the Netherlands may not mean the start of a powerful stream of U.S. liquefied gas to Europe.