(OIL PRICE) – Last week’s attempt by the U.S.’s Republican-controlled House of Representatives to unblock the stoppage on approvals of permits for new liquefied natural gas (LNG) looks highly unlikely to succeed. Despite the House approving a bill to remove the pause on LNG permits, it still needs to be passed in the Democratic-controlled Senate and then to be signed by Biden to become law. LNG remains the key emergency energy source in the new global oil market order, as analysed in full in my new book of the same name, and without the U.S. continuing to play its role as key producer and coordinator of other LNG supplies, the political cohesion of Europe – and of the West’s core NATO security alliance – may falter.
NATO’s response to Russia’s 2014 invasion of Ukraine and subsequent annexation of its Crimea region was non-existent to all intents and purposes. The reason why is that key countries in Europe – especially its de facto economic leader, Germany – had become reliant on cheap and plentiful supplies of Russian gas to power their economic growth over the years. None of them wanted any major punishments meted out on Russia for the 2014 invasion that might jeopardise these gas flows. The response of these European countries to Russia’s 2022 invasion of Ukraine was exactly the same at first.
Germany’s principal concern was ensuring that Russia did not stop supplying it, or other European countries, with either gas or oil, due to their not being able to pay in the way Moscow preferred. This followed the 31 March 2022 decree signed by President Vladimir Putin that required European buyers to pay in roubles for Russian gas via a new currency conversion mechanism or risk having supplies suspended. The official guidance document sent out to all 27 European countries that are members of the European Union (E.U.) on 21 April by its executive branch, the European Commission (EC), simply stated: “It appears possible [to pay for Russian gas after the adoption of the new decree without being in conflict with EU law],… EU companies can ask their Russian counterparts to fulfil their contractual obligations in the same manner as before the adoption of the decree, i.e. by depositing the due amount in euros or dollars.”
