The US can supply Europe long term with LNG at $7-$8/MMBtu, based on long-run marginal costs for additional infrastructure, US LNG pioneer Cheniere Marketing's vice president for strategy, Andrew Walker, said Monday.
"What US supply does very effectively is put a transparent price marker out there that says if you need gas in the future we can supply at this price," Walker told a public hearing organized by the European Parliament's energy committee.
"If others are asking you for a higher price then you should come and see us," he said.
"We think this is a very effective negotiating tool for the EU to have as it looks at its existing suppliers, be those Russian, Norwegian, domestic or otherwise," Walker said.
US LNG is already able to compete with Europe's existing gas supply sources at current prices of $4-$4.50/MMBtu, based on current infrastructure capacity, he said.
Cheniere loaded its first export cargo for international gas markets in February, and its seventh cargo went to Portugal in April. The others have gone to South America, the Middle East and Asia, Walker said.
SHALE GAS BACKLASH
Walker stressed the positive impact of US LNG exports on EU gas market competition, but some European Parliament members present were critical about the potential shale gas component.
Claude Turmes, a Green MEP from Luxembourg, pressed Walker about whether shale gas emissions were higher than for conventional gas, while others asked if the gas was cheap because the external climate costs were not priced in.
Walker said it was up to policy-makers to decide how to price the externalities for any fuel, and that Cheniere built infrastructure -- it did not produce the gas.
Several MEP also referred to French energy minister Segolene Royal's reported comments this month that she would ban shale gas imports to France, given that France has a ban on domestic fracking for shale gas.
"If we don't accept fracking in the EU, why do we import it?" French MEP Jean-Luc Schaffhauser asked at the hearing.
There are no binding EU-wide rules for producing shale gas, and EU countries have differing views on it. For example, Bulgaria and France have banned fracking, while the UK government supports it.
In 2014 the European Commission published a non-binding recommendation setting out environmental best practices for shale gas exploration.
The energy committee is about to start debating the European Commission's February proposals to update the EU gas supply security regulation and EU rules for intergovernmental energy agreements.
The committee will also debate the EC's proposed non-binding EU strategies for LNG and storage, and for heating and cooling.
