Donald Trump tweeted this around the time of the NATO summit. The tweet was directed against Germany. He said at the NATO leaders breakfast, “Germany, as far as I’m concerned, is captive to Russia, because it’s getting so much of its energy from Russia.” Wow! Angela Merkel knows well Soviet oppression as she lived in East Germany under Soviet control. It was also pretty weird given the circumstances. Most US presidents would try to get solidarity with EU countries at a NATO summit before sitting down with Putin. Trump went to Russia, where the theme seemed to be that Obama had screwed up relations with that country through a lot of foolish decisions, and now Trump was there to repair the damage.
The US could have a friendly relation with Russia, but not Germany. Trump has said he is guided by what is in the best interest of the US. So, why was Trump badgering Angela Merkel for acting in the best interest of her own country?
Nord Stream 2 Pipeline is due to be completed next year, to double the supply of natural gas from Russia. The 1200 km route, under the Baltic sea is nearly the same as the first Nord Stream gas pipeline. It will make Germany more dependent on Russia for power generation needs. Trump has repeated attacked Germany as a “captive state of Russia.”
Trump’s speech at the July 2018 NATO Summit meeting was laced with numerous false statements, particularly about NATO budgets and spending, as documented by politifact.com (see comments/ links below). The speech was filled with self-serving statements of how much the US is doing to keep the alliance going and how little the other countries are doing. I’m certain member states felt let down by Trump.
NATO is an alliance of 29 countries, with the US and Canada the only non-European countries. NATO began as an alliance between 10 Western European countries and the US and Canada in 1949. Western Germany became a member in 1955. There has been a great expansion of NATO in both 1999 and 2004 as Eastern European countries left the Warsaw Pact with Russia and joined NATO. The Warsaw Pact, formed to counterbalance NATO was disbanded in 1991.
NATO is both a political and military alliance. The Baltic states of Estonia, Lithuania and Latvia, sitting on Putin’s doorstep, are keenly aware of potential annexation of their countries, after Crimea was annexed. Ukraine is not a NATO member, but has close EU ties.
Natural gas production depends on an available market. Unless there are pipelines or liquefied natural gas (LNG) processing plants, the gas fields may not be economical to produce. This is the frustrating reality of natural gas fields. Obviously, Russia has no control over German power plants and their future use of fossil fuels, but will be a large supplier of fuel for their power plants for decades for the following reasons : (1) The North Sea gas supply is in decline, because the area has been extensively explored and developed in the past 40 years and (2) Other fuels are more expensive.
A recent report from the Energy Information Agency (EIA) indicates why Trump doesn’t like Russian gas going to Germany. For decades, all the natural gas produced in the US was either flared (a common practice with offshore wells) or used for the domestic markets. The supply of gas wasn’t sufficient to meet the demand, so 3 to 4 trillion cubic feet were imported from Canada. But we also exported 1 to 3 tcf. Now gas exports are likely to be higher than imports. The next 10 years are expected to expected to increase LNG exports by 14 tcf/yr, while imports decline to 2 to 3 tcf.
France and Spain are likely the big recipients of LNG coming from the US. The Asian countries, including Japan and India, will be the recipients of LNG from Iran-Qatar shared South Pars/ North Dome field. Total will likely pull out of the joint development of the South Pars field in response to Trump’s re-imposing sanctions on Iran. There’s speculation that Russia or China will take over Total’s contract. India’s economy will be hurt as there is insufficient LNG, at least temporarily. India is likely to burn more coal to generate power, hence generate more greenhouse gases.
The long term forecast by the EIA is contingent on many factors. LNG requires enormous investments. Cheniere Energy (LNG) is one of the largest companies in this area, and it has been a bumpy ride for investors. Cheniere is down about 20% in the last 5 years compared to the S+P performance of up 45%.
The trend of lower gas imports and higher exports began around 2009, and has continued through the 8 years of Obama’s presidency. But expect Trump to claim credit should the exports exceeds imports during his presidency.
Natural gas as a fuel source generates greenhouse gases. It is better than coal, but what really helps slow global warming, is increasing alternative non-fossil fuel sources and reducing energy demand.
It’s definitely a mess. Attacking member countries of NATO, re-imposing sanctions on Iran, and starting a trade war with China, all in the last few months, does not bode well for the global economy. What goes around, comes around.