Gazprom began producing Liquified Natural Gas (LNG) on Tuesday at the newly built Portovaya plant at the origin of the Nord Stream pipeline in Vyborg, Russia.
Earlier this month, Gazprom announced the indefinite shutdown of the Nord Stream 1 pipeline. With Nord Stream 2 also blocked this year by German regulators at the behest of the US, Europe will now have to make up this energy shortfall another way. The most direct way? LNG
LNG is the same fuel that travels via gas pipeline but cooled down to liquid form to be more efficiently transported by trucks or ships. Both the process of chilling the gas down and the transportation / receiving infrastructure make LNG significantly more expensive than piped.
But despite this higher cost, over a quarter of the LNG that Europe now consumes comes from the US. The largest customers in western Europe are Spain, the UK, the Netherlands, and France.
But despite this higher cost, over a quarter of the LNG that Europe now consumes comes from the US. The largest customers in western Europe are Spain, the UK, the Netherlands, and France.
This surge in LNG imports from the US is part of a wider trend of dramatically increasing US exports of LNG in recent years, with destinations spanning the globe. Sometime this year, the US is set to become the #1 exporter of LNG worldwide.
So if Europe already relies on LNG, why is Portovaya transitioning into an LNG terminal significant? Because instead of entirely abandoning the NS1 infrastructure as the US hoped, Russia will now load gas onto carriers and ship it to customers in the European market and abroad.
And while US LNG will have to travel to Europe from across the Atlantic, Russia can supply all these same countries much more readily from Vyborg, virtually right next door. As a result, Russian-supplied LNG is likely to be significantly cheaper than gas originating from the US.
This sudden entry of Russia into the European LNG market, a market the US seeks to dominate, will be seen as a major threat by the US, since the competition will drive prices down while also opening several new markets to a Russia no longer constrained by pipelines.
How is the US likely to react to this “threat”? Most likely by pushing EU govts to sanction all Russian gas. However, as Europe enters the cold winter months, these sanctions will almost certainly spark widespread unrest as prices skyrocket, placing enormous strain on the EU.
It’s clear the cancellation of Nord Stream 2 by the US was driven by the simple fact that the US could not compete on cost with Russia’s gas delivered to Europe by pipeline, and is instead banking on being able to compete with gas delivered by ship. So will this plan work?
It depends. For US LNG exports to remain competitive on a global stage long term, particularly with a strengthening dollar, direct competitors must be eliminated. This is why, from the perspective of the US empire, exports from Portovaya cannot be allowed to compete.
Modern imperialism is characterized by multiple factors. While the mere export of commodities like LNG in and of itself isn’t a characteristic of imperialism, the domination of global markets through monopoly-like control of major regions absolutely is.
In short, the EU is about to learn a very painful lesson: in this system of global imperialism dictated by the US, there is only one top dog and, when profitability declines, the price of playing junior partner is total subordination or destruction.
Addendum — To those (correctly) ready to point out that Portovaya’s max capacity in LNG is much less than NS1 gas: dollar hegemony didn’t collapse after the first oil trade was settled in yuan, nevertheless it was still the start of a significant shift toward a new paradigm!
TWITTER THREAD: professional hog groomer
