Trump pitches US natural gas to European leaders, suggests Russian gas holds them hostage

Key Points
  • President Donald Trump on Thursday pitched U.S. natural gas exports to leaders of 12 Central and Eastern European nations.
  • He vowed never to use U.S. energy exports to coerce other nations, a thinly veiled reference to Russia.
  • Russia has cut supplies to Europe in the past, prompting European nations to diversify their energy supply in recent years.
Trump: US eager to expand partnership with Poland
Trump: US eager to expand partnership with Poland

President Donald Trump on Thursday pitched U.S. energy exports to Europe as an alternative to supplies from Russia, a nation he suggested had held the region hostage in the past.

Trump made the comments in Warsaw, Poland, where he attended a meeting of the Three Seas Initiative, an effort by 12 Central and Eastern European nations to increase trade, infrastructure and energy ties.

"Let me be clear about one crucial point. The United States will never use energy to coerce your nations, and we cannot allow others to do so," Trump said at a press conference flanked by European leaders. "You don't want to have a monopoly or a monopolistic situation."

Trump did not name Russia directly, but his message was clear to the assembled leaders.

We are committed to securing your access to alternate sources of energy, so Poland and its neighbors are never again held hostage to a single supplier of energy.
President Donald Trump

Russia cut gas supplies to Europe in 2008 during a dispute with Ukraine. Russia's military intervention in Ukraine and annexation of Crimea in 2014 again raised concerns about Europe's reliance on Russian gas.

Trump on Thursday urged Russia to "cease its destabilizing activities in Ukraine and elsewhere and its support for hostile regimes."

Many of the Three Seas nations remain highly dependent on Russia for natural gas. The initiative's goal of building out north-south energy infrastructure aligns with the European Union's effort in recent years to better integrate its gas pipelines to guard against supply shocks, particularly from Russia.

President Donald Trump gives a public speech in front of the Warsaw Uprising Monument at Krasinski Square, in Warsaw, Poland.
Kacper Pempel | Reuters

"We are committed to securing your access to alternate sources of energy, so Poland and its neighbors are never again held hostage to a single supplier of energy," Trump said in a public speech in Warsaw, drawing cheers from the crowd.

The Trump administration hopes to ship more liquefied natural gas, or LNG, to the region. The United States has abundant supplies of low-cost natural gas and is building new terminals to ship the fossil fuel overseas in liquid form. Poland received its first shipment of U.S. LNG last month from Cheniere Energy's Sabine Pass terminal, currently the only export facility in the lower 48 states.

LNG trade between the United States and Three Seas nations would help Trump in his bid to reduce the U.S. trade deficit and stands to improve energy security among the European countries by giving them an alternative to Russian gas.

But the odds of U.S. LNG significantly displacing Russian natural gas shipped by pipeline are slim. Piped gas sells at a large discount to LNG, which must be cooled to liquid form, shipped overseas and turned back into its gaseous form.

Russia has the ability to cut prices and adjust contract terms to maintain its dominant position in the European gas market, said Ken Culotta, a partner in global law firm King & Spalding's energy practice. European countries are likely to continue sourcing most of their gas from the lowest cost supplier, he added.

Trump: We urge Russia to stop destabilizing activities
Trump: We urge Russia to stop destabilizing activities

Still, the Three Seas Initiative is heavily focused on diversifying the region's energy supply, Culotta said. Signing LNG supply agreements with U.S. companies also gives European countries an opportunity to ingratiate themselves with Trump, he added.

"One of the fastest ways to balance your trading with a foreign country is very high priced raw energy exports, so any country that is willing to commit to taking a lot of LNG ... is likely to be considered a pretty favored trade partner," Culotta said.

For the time being, those shipments may be limited due to the lack of capacity in the region.

There are also only two LNG import terminals within the Three Seas bloc — in Poland and Lithuania — though Estonia, Croatia, Latvia and Romania also have plans to open LNG terminals. Pipeline connections to Western Europe, which has more LNG terminals, are also limited.

Trump made his comments ahead of his first meeting with Russian President Vladimir Putin at a G-20 meeting in Hamburg, Germany, this week.

The FBI is currently investigating whether Trump's presidential campaign colluded with Russia to interfere in the U.S. election. Trump has downplayed allegations by the U.S. intelligence community that Russia intervened in the election to the outcome in his favor. On Thursday, he again cast doubt on that assessment.