[Senate Hearing 117-525]
[From the U.S. Government Publishing Office]
S. Hrg. 117-525
EUROPEAN ENERGY SECURITY: AMERICA'S ROLE
IN SUPPORTING EUROPE'S ENERGY DIVERSIFICATION
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON EUROPE AND
REGIONAL SECURITY COOPERATION
OF THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
__________
JUNE 9, 2022
__________
Printed for the use of the Committee on Foreign Relations
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
49-947 PDF WASHINGTON : 2023
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COMMITTEE ON FOREIGN RELATIONS
ROBERT MENENDEZ, New Jersey, Chairman
BENJAMIN L. CARDIN, Maryland JAMES E. RISCH, Idaho
JEANNE SHAHEEN, New Hampshire MARCO RUBIO, Florida
CHRISTOPHER A. COONS, Delaware RON JOHNSON, Wisconsin
CHRISTOPHER MURPHY, Connecticut MITT ROMNEY, Utah
TIM KAINE, Virginia ROB PORTMAN, Ohio
EDWARD J. MARKEY, Massachusetts RAND PAUL, Kentucky
JEFF MERKLEY, Oregon TODD YOUNG, Indiana
CORY A. BOOKER, New Jersey JOHN BARRASSO, Wyoming
BRIAN SCHATZ, Hawaii TED CRUZ, Texas
CHRIS VAN HOLLEN, Maryland MIKE ROUNDS, South Dakota
BILL HAGERTY, Tennessee
Damian Murphy, Staff Director
Christopher M. Socha, Republican Staff Director
John Dutton, Chief Clerk
SUBCOMMITTEE ON EUROPE AND
REGIONAL SECURITY COOPERATION
JEANNE SHAHEEN, New Hampshire, Chairman
BENJAMIN L. CARDIN, Maryland RON JOHNSON, Wisconsin
CHRISTOPHER MURPHY, Connecticut JOHN BARRASSO, Wyoming
CHRIS VAN HOLLEN, Maryland MITT ROMNEY, Utah
CHRISTOPHER A. COONS, Delaware ROB PORTMAN, Ohio
TODD YOUNG, Indiana
(ii)
C O N T E N T S
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Page
Shaheen, Hon. Jeanne, U.S. Senator From New Hampshire............ 1
Johnson, Hon. Ron, U.S. Senator From Wisconsin................... 2
Prepared Statement........................................... 3
Hochstein, Amos, Presidential Coordinator, U.S. Department of
State.......................................................... 4
Prepared Statement........................................... 6
Additional Material Submitted for the Record
Responses of Mr. Amos Hochstein to Questions Submitted by Senator
Robert Menendez................................................ 24
Responses of Mr. Amos Hochstein to Questions Submitted by Senator
James E. Risch................................................. 27
Responses of Mr. Amos Hochstein to Questions Submitted by Senator
John Barrasso.................................................. 30
Letters and Testimonies From European Allies..................... 36
Fact Sheet, Count on Coal Organization, Submitted by Senator
James E. Risch................................................. 115
(iii)
EUROPEAN ENERGY SECURITY: AMERICA'S ROLE IN SUPPORTING EUROPE'S ENERGY
DIVERSIFICATION
----------
THURSDAY, JUNE 9, 2022
U.S. Senate,
Subcommittee on Europe and Regional
Security Cooperation,
Committee on Foreign Relations,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:31 a.m., in
room SD-419, Senate Office Building, Hon. Jeanne Shaheen,
chairman of the subcommittee, presiding.
Present: Senators Shaheen [presiding], Murphy, Van Hollen,
Johnson, and Portman.
OPENING STATEMENT OF HON. JEANNE SHAHEEN,
U.S. SENATOR FROM NEW HAMPSHIRE
Senator Shaheen. This meeting of the Senate Foreign
Relations Subcommittee on Europe and Regional Security
Cooperation will now come to order.
I am pleased to be joined by Ranking Member Senator
Johnson.
As we all know, supporting energy diversification in Europe
is a key U.S. priority, and I hope that our discussion today is
going to offer some ways in which Congress can best address
this issue. I personally have been concerned that Russia's
energy policy toward Europe was not just a simple transactional
arrangement to provide oil and gas, but a tool that Putin could
weaponize and, as we have seen, has weaponized to advance his
foreign policy agenda. That has been a concern for a number of
years in this committee. That is why I worked on sanctions
legislation on Nord Stream 2 to prevent its completion and to
deny Putin his ambition to further punish Ukraine for its pro-
European aspirations.
Russia's unprovoked--illegal and unprovoked invasion--
further invasion of Ukraine earlier this year brought an end to
Nord Stream 2, fortunately, but it also shed light on the
significant influence that Russia wields over Europe through
its gas and oil exports. The Transatlantic Alliance is an
agreement. Europe must work to end its dependence on Russian
energy resources. I want to congratulate our European allies
for making critical, but difficult, decisions to accelerate
their strategy to end their dependency on Russian energy
sources.
We must not forget the impact that these decisions have on
households and businesses across Europe and here in the United
States. In the U.S., we have seen gas prices skyrocket, leaving
too many families struggling as they experience high fuel
costs. The same trend is true in countries all across Europe.
Lowering fuel costs, increasing energy efficiency, and
diversifying how we heat our homes is critical for Americans
and for our allies and partners. That is why it is so important
that just last week, the European Union announced a sixth
package of sanctions that would end their dependency on Russian
oil.
Furthermore, the European Union has accelerated its
strategy to end its dependence on Russian gas by banning coal
imports and establishing the EU Energy Purchase Platform, a
voluntary coordination mechanism for the common purchase of
gas, LNG, and hydrogen. This transition is important in the
near term to stop petrodollars from flowing to Russia and
funding the Kremlin's campaign to wipe Ukraine off the map. The
effort is also important as part of our shared commitment to
save our planet by investing in clean energy sources. At the
COP26 Summit in Glasgow, the United States and our allies made
ambitious, but critical, commitments to emissions reductions
that will keep the target of limiting warming to 1.5 degrees
within reach.
Speeding the transition to clean energy and ramping up
energy efficiency feature prominently in Europe's proposed
solutions to reducing their energy dependence on Russia, but of
course, what is still unclear is how Russia's war on Ukraine
has altered Europe's ability to uphold its commitments and
meeting its targets. Yet the process of detaching Europe from
its reliance on Russian energy sources is complex and still
politically fraught, as I am sure we are going to hear this
morning. We have seen the challenges with Hungary's objections
to the imposition of the ban on Russian oil.
Ending Europe's reliance on Russian energy must be a
thoughtful process, one that is fully implemented to ensure
loopholes and back doors are closed to Russian suppliers. I am
eager to hear from our Administration witness this morning how
these efforts to transition away from Russian oil and gas
benefit both climate efforts and energy security, and I look
forward to hearing the tools that the United States has to help
countries in Eastern Europe, particularly those in the Western
Balkans, reduce their dependence on Russian oil, and how that
can help thwart Putin's effort to divide European unity and
prevent aspirant countries that want to join the European
family. The State Department, USAID, the Department of Energy,
and the Development Finance Corporation are already playing a
role in advancing these efforts, and I look forward to
understanding how they fit into our broader strategy toward
Europe.
We must find ways to urgently support our allies and
partners across the Atlantic and find creative and effective
ways to supply energy while maintaining our focus on reducing
fossil fuel dependence. I hope this hearing will help us do
just that.
With that, I turn to Ranking Member Johnson.
STATEMENT OF HON. RON JOHNSON,
U.S. SENATOR FROM WISCONSIN
Senator Johnson. Well, thanks, Senator Shaheen, and I will
just ask for my written opening statement to be entered in the
record because it pretty well marries with an awful lot of
things that you are saying there. Coming from the private
sector, the last thing you would ever allow your business to do
when there are multiple suppliers was become dependent on one.
Here in the world, we have got multiple suppliers of oil, and
gas, and coal, and yet Europe has allowed itself to become
basically 40 to 45 percent dependent on Russia, knowing full
well how they will use that geopolitical power for their aims,
for Russia's aims. Of course, now we are witnessing it in
Ukraine.
Just how dependent Europe is is pretty obvious now that we
have this war in Ukraine, the--again, the unprovoked, the
atrocities, the war crimes being committed right now. Europe
cannot do much about weaning themselves off the oil, and so
they continue to fund--through oil purchases, continue to fund
the war effort, so it is a travesty. All of us, Democrat,
Republican, multiple Administrations, have been warning Europe
about it.
Hopefully, Europe will understand how vulnerable they have
become and the ramifications of becoming this vulnerable in
today's world. I am not sure there is much we can do about it
right now. I will have some questions just in terms of exactly
to what extent they have been able to begin the weaning
process. I do not think it is much. We had a secure briefing,
and it did not sound like much, did not have the exact numbers,
but maybe we will get some more information from you today.
This situation could have been avoided by long-term planning
and just applying basic business principles. Again, as a
business, you would never get yourself in this position when
there are multiple suppliers for this kind of material.
So anyway, I appreciate you holding this hearing. It is an
important one and look forward to the testimony.
[The prepared statement of Senator Johnson follows:]
Prepared Statement of Senator Ron Johnson
Thank you Senator Shaheen. Today's hearing will examine Europe's
efforts to reduce its reliance on Russian energy and U.S. policy
options for supporting this goal. Russia's February invasion of Ukraine
appears to have finally shaken Europe out of its lethargy on this
issue. For years, the United States and some EU member states have
warned about the geopolitical dangers of relying on Russian energy
imports. Those warnings were largely ignored, and Ukraine is now paying
a horrific price. It is critical that European leaders seize this
moment to adopt a realistic strategy for achieving energy independence
as soon as practicably possible.
This subcommittee held a hearing on European energy security back
in December 2017. At that time, the EU was the world's largest energy
importer, with a daily bill totaling more than 1 billion euros. Russia
was the EU's main supplier, accounting for more than a third of
Europe's natural gas imports. Four years later, European reliance on
Russian energy, particularly natural gas, has gotten worse. In 2021,
Russian natural gas imports rose to an astonishing 45 percent of EU
imports and 40 percent of total EU gas consumption. Over the last 3
years, and despite the best efforts of this Congress and the prior
Administration, leading EU member states green-lighted the 767-mile
long Nord Stream 2 pipeline which would have added another 55 billion
cubic meters of Russian gas import capacity to Europe--the project only
being paused just before Russia invaded. Even with Europe scrambling to
reduce energy payments to Russia after the full-scale February
invasion, by the end of April, the EU had already spent an estimated
$44.7 billion on Russian imports since the war began. In sum, years of
willfully blind energy policy has made weaning Europe off Russian
energy a more difficult task. Fortunately, at least now there appears
to be agreement that it is necessary.
Since the invasion, the EU has adopted a number of measures aimed
at reducing its reliance on Russian energy. Most recently, on May 30,
the EU agreed to ban imports of Russian oil delivered by tankers--an
estimated two-thirds of Russian oil imports. This represents the most
significant step taken by the EU to cut off Russian energy and even
this step took weeks of wrangling in the EU parliament and will not
fundamentally change Russia's dominance in the EU energy market nor
cripple the Kremlin's ability to finance its atrocities in Ukraine. A
major underlying problem that needs to be addressed is that EU domestic
energy production, apart from renewables, has been decreasing steadily
over the last two decades. This slackening production, moreover, has
largely been elective, as the EU has prioritized clean energy goals
over energy independence. Reversing this trend will undoubtedly be a
major piece of any long-term solution to curing Europe of its addiction
to Russian energy.
In the past, it has not been uncommon for U.S. allies in Europe to
rebuff U.S. efforts to promote European energy independence from
Russia. There should no longer be any doubt as to the appropriateness
of U.S. concerns on this issue. Peace in Europe is a core U.S.
interest, and Europe's security is deeply impacted by its energy
independence or lack thereof. The United States stands ready to help;
we only ask our European partners to tackle this challenge with the
urgency it so clearly requires.
I look forward to hearing from our witness today about Europe's
strategy to decrease its reliance on Russian energy and the Biden
administration's plan to support this critical goal.
Senator Shaheen. Thank you, Senator Johnson, and I know our
witness today is going to shed light on all of those issues. He
is U.S. presidential coordinator for energy security, Amos
Hochstein.
Mr. Hochstein brings deep expertise in the energy sector.
He has worked on U.S. energy policy at the State Department in
several different roles, including leading the Department's
Bureau of Energy Resources. He has also spent time on the Hill
here in both chambers as senior policy advisor to the Foreign
Affairs Committee of the U.S. House and as an advisor to
Senators Chris Dodd and Mark Warner. Mr. Hochstein also has
experience in the industry. He has advised both domestic and
international oil and gas companies, and his perspective on the
energy sector from so many different angles, as well as his
expertise on energy markets, informs his testimony today and
makes him an excellent witness for this discussion.
So we will submit your entire testimony for the record and
ask if you could try and keep your opening remarks to the 5-
minute window. So we very much appreciate your being here in
person this morning. Thank you.
STATEMENT OF AMOS HOCHSTEIN, PRESIDENTIAL COORDINATOR, U.S.
DEPARTMENT OF STATE
Mr. Hochstein. Thank you, Madam Chairman, and Ranking
Member Johnson, and members of the subcommittee. Thank you for
the opportunity to discuss the Administration's efforts to
support energy--Europe's energy security.
Putin's war of choice against Ukraine has affected global
energy prices and underscored the imperative to diversify away
from Russian energy dependence while accelerating the clean
energy transition. The Biden Administration supports Europe's
efforts to achieve these goals in real energy security while
depriving Putin of the economic revenues underwriting his war.
This is not easy. Europe's dependence on Russian energy is
significant and longstanding, and Europe will face difficult
decisions in these efforts.
The United States has long recognized the vulnerability
that dependence on Russia poses to European energy security.
The President and members of this committee have focused on
this issue for several years. In 2021, Russia provided around
45 percent of the EU's total natural gas imports and 27 percent
of oil imports, and we can see that Russia is leveraging its
fossil fuels as a weapon. The evidence for that is quite clear.
Examples of Gazprom cutting off natural gas supplies are
numerous from Poland and Bulgaria to Finland, Netherlands, and
Denmark. We have been working in lockstep with Europe to
respond decisively.
In the fall of 2021, we began working to divert LNG cargoes
to Europe to avoid winter blackouts and shortages. In the first
4 months of 2022, the EU and U.K. imports of U.S. LNG more than
tripled compared to 2021, and, on average, U.S. companies
shipped 7.3 billion cubic feet, or bcf, of LNG to Europe per
day, accounting for 49 percent of LNG imports. The United
States is now the largest supplier of natural gas to Europe,
and Europe is taking steps to secure its energy supply. Finland
reached an agreement with an American company, Excelerate, to
get a floating storage and regasification unit in place by
October that will allow Finland and Estonia to import
additional LNG this winter. This builds on previous decisions
by individual countries to voluntarily reduce imports of
Russian fossil fuels.
Addressing the threat Russia poses to European energy
security is not a simple task, as I said. Russia is one of the
largest global producers and suppliers of fossil fuels. In
2021, Russian oil production reached 10.5 million barrels per
day, making up 14 percent of the world's total supply, and
exports to Europe total 2.4 million barrels per day.
The Administration has been working tirelessly to take
actions that support energy--European energy security. With the
International Energy Agency, we initiated two historic
collective releases from the Strategic Petroleum Reserve,
including a U.S. contribution that put 1 million extra barrels
of oil per day for 6 months on the market. We supported
cooperative initiatives with Europe to shift rapidly from
Russian fossil fuels while accelerating the clean energy
transition. On March 25 this year, President Biden and European
Commission von der Leyen--President von der Leyen, announced a
joint task force to address European energy security. It has
two goals: to diversify Europe's natural gas imports in the
short term and reduce demand for fossil fuels in line with our
share to climate and energy goals--clean energy goals. When
Putin unilaterally violated his contract and illegally cut off
gas supplies to Poland and Bulgaria, which went from a 95-
percent dependence on Russia to zero literally overnight, we
took swift collective action to support their efforts in
identifying alternative LNG and pipeline gas supplies, and even
that is not enough.
While LNG diversification work has received a great deal of
attention, our efforts with the EU on increased energy
efficiency--and I know, Madam Chair, that you have done a lot
of work on the efficiency side of this equation--and demand
reduction have an equal, if not more important, role in
Europe's long-term energy security. The most effective way to
reduce demand for Russian fossil fuel is to reduce dependence
on all fossil fuels. The President has been clear. We have to
advance these goals in parallel, diversifying away from Russia
while accelerating the clean energy transition.
The U.S. and Europe are advancing energy demand reduction
in the near term through facilitating smart technology
deployment, increased energy efficiency, and renewable energy
integration. We are working with the EU to engage key
stakeholders to achieve that goal, and the EU plans to spend
$56 billion on these efforts. We welcome EU and member states'
efforts to accelerate that transition to reduce the dependence
on fossil fuels. They are expediting approvals for renewable
energy projects. Just for example, full permitting for a
ground-mounted solar project in the EU takes 4-and-a-half
years. A wind project takes almost 9 years. Reducing these
times will accelerate the clean energy transition and decrease
Europe's dependence on Russian fossil fuels.
The Administration prioritizes strengthening Europe's
energy security, and in these critical times, our cooperation
has only strengthened. We are working alongside our European
allies and partners to move away from Russian fossil fuels and
towards a clean energy future and talk to them literally on a
daily basis.
Thank you, and I look forward to addressing your questions.
[The prepared statement of Mr. Hochstein follows:]
Prepared Statement of Mr. Amos Hochstein
Chairwoman Shaheen, Ranking Member Johnson, and members of the
subcommittee, thank you for the opportunity to discuss the
Administration's efforts to support Europe's energy security.
Putin's war of choice against Ukraine has affected energy prices
around the world and has underscored the imperative to diversify away
from Russian energy dependence while accelerating the clean energy
transition. The Biden administration has worked to support Europe's
efforts to achieve these goals, and real energy security, while
depriving Putin of the economic revenues underwriting his war. This
will not be easy--Europe's dependence on Russian energy is significant
and longstanding. It will take time to change course from decades of
policy, and Europe will face difficult decisions in their efforts to
reduce that dependence.
The United States has long recognized the vulnerability that
dependence on Russia poses to European energy security. Indeed, the
President and Members of this Committee have focused on this issue for
several years. Europe's reliance on Russian fossil fuels did not happen
overnight--and European leaders have acknowledged it will take time to
phase out these dependencies. In 2021, the EU relied on fossil fuels
for more than 70 percent of its energy needs, with some countries
almost entirely dependent upon Russian sources. Russia provided around
45 percent of the EU's total natural gas imports and 27 percent of oil
imports. And we can see today that Russia is leveraging these exports
and its fossil fuels as a weapon. The evidence is clear--examples of
Gazprom cutting off natural gas supplies are numerous, from Poland and
Bulgaria to Finland, the Netherlands, and Denmark.
Make no mistake, though, we have been working in lockstep with
Europe to respond through decisive actions. Our close cooperation
started in the fall of 2021, when we began working to divert LNG
cargoes to Europe. We continued these efforts through the winter to
help Europe avoid winter blackouts and shortages. And the United States
continues to play its part in supporting European energy security. In
the first 4 months of 2022, EU and UK imports of LNG from the United
States have more than tripled when compared with 2021. U.S. companies
on average shipped 7.3 billion cubic feet of LNG per day to the region
and accounted for 49 percent of the region's total LNG imports. The
United States is now the largest supplier of natural gas to Europe. And
Europe is taking its own steps to secure its energy supply. For
example, Finland has reached an agreement with an American company to
get a floating storage and regasification unit in place by October that
will allow both Finland and Estonia to import additional LNG this
winter. This builds on the previous decisions by individual countries,
such as Germany, Estonia, Latvia, Lithuania, and Poland, which
previously announced their intent to voluntarily reduce imports of
Russian fossil fuels.
Addressing the threat Russia now poses to European energy security
is not a simple task. Russia is one of the largest global producers and
suppliers of fossil fuels, particularly oil and natural gas. In 2021,
Russian crude and condensate oil production reached 10.5 million
barrels per day (bpd), making up 14 percent of the world's total
supply, and exports to Europe totaled 2.4 million bpd. Russia's natural
gas exports to Europe through pipelines totaled around 150 billion
cubic meters or bcm, in 2021, and Russia exported 40 bcm of LNG in 2021
globally, accounting for 8 percent of the world's supply and making it
the fourth-largest exporter of LNG. The Administration has been working
tirelessly, engaging global allies, partners, and friends, as well as
the private sector, both domestically and internationally, to take
actions that support European energy security. We have achieved notable
success, including working with allies to redirect LNG cargoes to
Europe. In conjunction with our partners in the International Energy
Agency, we initiated two historic collective releases from the
Strategic Petroleum Reserve, including a U.S. contribution that put 1
million extra barrels of oil per day on the market over 6 months. And
we have supported cooperative initiatives with our European allies and
partners to shift rapidly from Russian fossil fuels while accelerating
the clean energy transition.
On March 25 of this year, President Biden and European Commission
President von der Leyen issued a joint statement on the creation of a
joint task force to address immediate actions toward achieving European
energy security. It has two distinct yet equally important goals: (1)
diversify Europe's natural gas imports in the short term and (2) reduce
demand for fossil fuels in line with our shared climate and clean
energy goals.
When Putin unilaterally violated his contracts and illegally cut
off gas supplies to Poland and Bulgaria, which went from a 95 percent
dependence on Russia to zero, we took swift collective action to
support their effort in identifying alternative LNG and pipeline gas
supplies. The United States and European Commission are also working to
reduce the greenhouse gas intensity of natural gas infrastructure
across its entire value chain in Europe to sustain progress toward our
shared climate goals, including on the development of new LNG
infrastructure. This effort will include using clean energy to power
onsite operations at LNG facilities and reducing methane leakage during
production and transmission.
While LNG diversification work has received a great deal of
attention, our efforts with the EU on increased energy efficiency and
demand reduction have an equal, if not more important, role in ensuring
Europe's long-term energy security. The most effective way to reduce
demand for Russian fossil fuels is to reduce dependence on all fossil
fuels. The President has been clear we need to advance these goals in
parallel, diversifying away from Russian fossil fuels while
accelerating the overall clean energy transition.
The United States, the European Commission, and EU member states
are advancing energy demand reduction in the near-term through
facilitating smart technology deployment, increased energy efficiency,
and renewable energy integration. We are working with the European
Commission to engage key stakeholders, including the private sector, to
get technologies like heat pumps and smart thermostats into homes. We
are exploring how we can accelerate deployment of these technologies as
quickly and efficiently as possible by meeting with national and
private sector counterparts.
We also welcome EU and member states' efforts to accelerate the
clean energy transition. The Commission has proposed increasing the EU-
wide target for renewables from 40 to 45 percent of total energy
production by 2030 and setting a more ambitious binding energy
efficiency target. According to the European Commission's own REPowerEU
proposal, the adoption of smart thermostats and heat pumps in
residences can replace 15.5 bcm of gas demand this year. To reduce
dependence on fossil fuels, the EU is expediting planning and approval
for renewable energy projects. For example, full permitting for a
ground-mounted solar project in the EU currently takes 4 and a half
years--and a wind project takes 9. Finding ways to cut down those wait
times will accelerate the clean energy transition and decrease Europe's
dependence on Russian fossil fuels.
In our engagement with European Commission counterparts, we agreed
on the importance of quickly scaling up the deployment of smart
technologies to increase energy efficiency and reduce demand. EU member
states outlined plans to reduce demand through electrification of the
largely gas-dependent heating sector, public outreach to turn down
thermostats for residential heating, and increased deployment of heat
pumps in anticipation of the winter heating season.
The Administration prioritizes strengthening Europe's energy
security, and in these critical times, our cooperation has only
strengthened. We are working diligently alongside our European allies
and partners to move away from Russian fossil fuels and towards a clean
energy future.
Thank you. I look forward to addressing your questions.
Senator Shaheen. Thank you very much for your testimony.
So as you talk about the various ways in which we are
trying to help Europe, what do we see as the biggest
challenges? I assume that over the summer, things will remain
relatively stable, but when we get into the fall, as we look at
the ongoing war and the winter coming, what particular
challenges are there, and what more can we do to be helpful?
Mr. Hochstein. Well, as you stated, this is really
difficult, and, as Senator Johnson just said, Europe has put
itself in a really precarious position, and, we, the United
States, are now in the position to help him get out of this
precarious condition. We have, for the last--at least for the
last 10 years, 12 years that I have worked on--intensively on
energy security in Europe, I have been trying to get them to
understand the danger of relying not just on one supplier, as
Senator Johnson said, but on Russia as being that one supplier
when they have proven time and again that they will use that
for political purposes and political leverage.
So what we have done so far, trying to accelerate the LNG
from the United States from Qatar, from Australia into Europe.
Last winter, we identified the crisis before the Europeans did,
before the war even started. We used our diplomatic efforts
with purchasers around the world to see if they can accept less
gas in their storage, still to secure their demand, but to
lessen storage and divert those cargoes to Europe. That and a--
the God effect of a mild winter saved us from having actual
shortages, but that is how close we got to depleting, going to
zero.
Russia started this process long before the war. From May
of last year, they started undersupplying Europe with gas to
make sure that by the winter when they launched the war, gas
supplies would be low. So what we are trying to do is to see
what can we--how can we work within the market forces to see if
we can identify re-routing of gas to Europe on an urgent basis
and reduce the demand itself. That is the hardest task. The
first year is going to be very difficult. The summer is the
most important period because we need to build up the stocks
and the reserves for storage in Europe that are at a low level
now. Europe uses the summer to fill and the winter to use. So
we have to get--by November 1, we have to get to somewhere in
the 85 to 95 percent of storage across Europe. That is a really
tall ask, and we are working on that tirelessly.
Senator Shaheen. So can you talk a little bit more about
what is going on with respect to the demand side and to energy
efficiency? As we know, the--that is the cheapest, fastest way
to deal with our energy needs, energy that is not used, does
not have to be produced. I know Ukraine, and for all that I
really admire what they are doing, from an energy perspective,
they have been most--one of the most energy inefficient
countries in Europe. So what is happening that can really focus
more on that efficiency side in ways that help deal with the
energy needs?
Mr. Hochstein. So the issue in Europe is that gas is--does
not compete really with renewables all that much because gas is
used for heating and not for power in most countries. So we
would need--in order to get the--move it to renewables, we
would have to electrify the heating system, so that is a step
in between. So we focus not just on moving to renewals, but
rather using technologies that are used in a--sort of widely
used in the United States, but not in Europe. We use smart
thermostats in the United States far more than in Europe. They
are--they are--they are very rare in Europe, and that alone
could save 6 to 10 bcm of gas demand just if we can get 10
percent of homes to use those kinds of technologies. Heat
pumps. If we can get more of those into the system, we can
reduce it, as you said, take away the demand for the molecule
itself.
On oil, it is even harder because the supply is really
constrained around the world. We are suffering from gasoline
prices in the United States, and Russia is such a big supplier
into Europe, but beyond just oil, it is about the refined
products, so gasoline, diesel. We, as a result of the pandemic,
lost a lot of those capabilities and capacity that is not
coming back, so we have to be more efficient, and we have to
accelerate the efficiency levels and the alternatives to oil
and gas in Europe as much as we can. It is not just about the
United States. It is about looking at what is happening in
North Africa, the East Med, more efficiency in Norway, and re-
routing all these pipeline gas systems to support Europe while
we work on the efficiency.
Senator Shaheen. Thank you. Senator Johnson.
Senator Johnson. So I am a numbers guy, and kind of looking
at my prep material here, we are going from, on your testimony,
billion cubic feet, then billion meters. This is just--I tried
to make head nor tails. It is pretty difficult. So let us here,
because what I really want to get at is to what extent have the
imports from Russia on natural gas, oil, and coal, to what
extent have we reduced those over the last 100 days of this
war? I mean, how successful have we been? I mean, obviously, we
have increased shipments from LNG from the U.S. That looks
pretty impressive in terms of 4 times the region's total, but
where do we sit on a macro basis?
Mr. Hochstein. So what is happening--I think you are right.
What is happening is less about how much oil is going off
market or how much gas is being shut out of market from Russia
and how much of it is being rearranged to some degree. So the
reason that you are seeing so much gas coming into Europe from
the United States and from Qatar is because the Russian gas is
not--is moving in other directions. So they have prioritized
the Chinese pipeline. The LNG is still going, but they were
beginning from such a low threshold, that even if they continue
to buy the Russian gas, which they are, they need more just to
get to the starting point of the winter.
On oil is where the rearrangement is happening. So you are
seeing a lot less oil going into Europe on a seaborne and going
more towards India. So you have seen the Indian numbers in the
press. They have gone from less than 100,000 barrels a day on
average, Russian supply, to close to 800,000. China has
increased its purchases from Russia. That means two things.
One, the voyage is shorter, so Russia now has to sell it with
shipping costs that are far greater, and because those
countries know that there is constraint on Europe and the
United States banning or constraining the purchase, the
discount to the Russian oil is getting--is wider and wider. So
we are getting reports in the press and from industry of
significant discounts for Russian oil. So it is less about the
volume coming down and more about the revenues.
We also know that some of the production----
Senator Johnson. So what is your estimate in terms of the
reduction in revenue then to Russia? So in other words, they
are probably selling the same amount of oil, gas. It is just
going to different places, but because it is going different
places, they have increased transportation costs, and people
are taking advantage of situation and not paying as high a
prices as Europe was paying.
Mr. Hochstein. Correct.
Senator Johnson. So do you have--do you have some kind of
estimate in general? First of all, how much on an annual basis
or monthly basis--what is the revenue estimate for Russian sale
of fossil fuels? Do you kind of have that basic number?
Mr. Hochstein. I do not think I have that number in front
of me. I have that number. I just do not have that specific
number in front of me, and I can get that to you after the
hearing.
Senator Johnson. Do you have a kind of sense then in terms
of the percent reduction then, based on they had transportation
costs and the discounts that they are having to sell to these
other places?
Mr. Hochstein. So in most cases there, if you do the
combination of both, they are looking at, in some cases,
between $20 and $30 discount to Brent. So with Brent being very
volatile, I would have to calculate, but today we are at $120
Brent. About 10 days ago, we were at $110, and 10 days before
that we were at $105. So you have to look at the Urals, which
is the Russian grade, trading at somewhere in that $20 to $30
discount.
What we are seeing, though, is--which will only manifest
itself a little bit later, is that their production levels are
coming down--starting to come down. So they can export the same
amount because their demand is down, because the economy in
Russia is down, so the demand is down, and they are putting
less in storage. That is going to take some time to catch up
where production levels are down. The production levels are
down because Western companies have left, so maintenance,
parts, equipment, expertise are gone, and as time goes by, that
starts taking more and more of a hit--somewhere in the 5 to 15
percent is the estimate--on any field that was managed by
either a U.S. or European company.
I will try to do a better job and get some specific
numbers----
Senator Johnson. Can you--do know what the cost of Brent
was a year ago at the start of this Administration?
Mr. Hochstein. So before, I would say, last summer, we were
in the $70s. We ramped up as the--ramped up to about $86 in
November as COVID started easing, then we got Omicron fears and
prices went down again on the fear that we would go to
lockdown. Already then, we have the estimates where we are
going to $100 because of a supply demand. Once the--once the
troops started amassing on the border in December/January,
prices started really going up, and then we were stable in the
$100 to $110, and only in the last couple of weeks we have gone
to $120.
Senator Johnson. So I guess my point to this quick analysis
is that the price increased more than the discount that they
are recognizing right now----
Mr. Hochstein. Correct.
Senator Johnson. --because they are selling to other
places. So Russia is actually in a better position revenue-
wise, it appears, at this stage in the war than they were at
the start of the war.
Mr. Hochstein. I cannot deny that.
Senator Johnson. Well, I am not----
Mr. Hochstein. --revenue.
Senator Johnson. No, it is just unfortunate.
Mr. Hochstein. It is very unfortunate.
Senator Johnson. It is an important fact for the U.S. to
realize that they are actually probably getting more revenue
from their sale of fossil fuels globally at this point, 100-
plus days into the war, than they were at the start of the war.
Mr. Hochstein. Than before, I would say, a couple of months
before the war started----
Senator Johnson. Right.
Mr. Hochstein. --because by the time the war starts in
February----
Senator Johnson. It was already ramping up. Okay. I got
you.
Mr. Hochstein. It was already ramping up.
Senator Johnson. Okay.
Mr. Hochstein. So it was definitely before the war. I will
note, coming out of COVID, the demand increase that we are
seeing around the world is far greater, stronger than anyone
expected, especially since 6 months ago we thought we were
going into lockdowns, and people were saying that we may be at
$50 oil, and----
Senator Johnson. Yes. No, again, my whole point here is----
Mr. Hochstein. I agree with your point.
Senator Johnson. Yes, my whole point is, is Russia in a
better position or a worse position 100 days in this war vis-a-
vis the revenue they are getting off their fossil fuel, and
they are, unfortunately, in a better position. Regardless of
all the sanctions, all the--all the pressure, all the
substitution and that type of thing, they are getting more
revenue today than they were certainly a few months before the
war.
Mr. Hochstein. I think if you look at it narrowly just on
price they get per barrel sold, then I would agree with you on
that. I think the broader picture is that they have a harder
time getting the money back into Russia, so some of the money
sits in accounts outside of Russia, so they cannot utilize
those revenues because of restrictions on bank transfers, et
cetera, and currency. They have a harder time spending that
money, and they cannot take care of their fields. So that is
what I--my point before. Their production is starting to
actually decline.
So I would argue that, narrowly, on revenue per barrel,
yes, but broadly, no, they are in worse--they are in far worse
shape, and they will not be able to cover their natural
declines and their aggressive declines, so, and they know that.
They are trying to work every which way in order to get parts
and other things in order to prevent--because that is--that is
calamitous for them over the next 6 months.
Senator Johnson. So these are the kind of questions I was
asking in our secure briefing with the intelligence folks from
the State Department. They did not have the answers. You have
actually given me some pretty good information, which I
appreciate. I still do not have the full story, so if you have
that analysis, I think it is an important one for policymakers
to understand exactly what is happening here, to what extent
Russia is really getting squeezed. Right now, it does not--it
just does not seem like they are getting squeezed that much, so
but anyway.
Mr. Hochstein. In a secure format, I can give you a little
bit more than what I have given you here on their picture on
the hit to their industry, but I think on that would be
difficult for me to do that here.
Senator Johnson. Okay. No, I appreciate that. Thanks.
Senator Shaheen. Thank you, Senator Johnson. Senator
Murphy.
Senator Murphy. Thank you very much, Senator Shaheen, for
convening this important hearing. Amos, good to see you. You
are a truly indispensable person in our fight to try to make
sure that Russia pays a price for their aggression and that we
move Europe forward on a path towards energy independence. I
thank you for everything you are doing.
I am not going to ask you a question about Saudi Arabia,
but I know that you are deeply involved in the effort to try to
unlock additional resources from our Gulf partners. I will just
say I have been incredibly unimpressed by the commitments that
they have made. I think there is great doubt as to whether it
will actually move the needle on global pricing. I also note
that at the same time that they are increasing production, they
are also increasing their official selling price for refiners
in top destinations in Asia and Europe, signaling that they are
still very much looking to use this crisis as a means to
increase their profit taking. So I think we have a lot more
work to do on that front.
I do want to stick to the topic at hand, though, and talk
about what capacities we have to try to help our friends in
Europe. I note that we just passed $40 billion dollars in
assistance for Ukraine, and nowhere in that package was hard
dollars to try to help our friends and allies in Europe become
energy independent. That remains very strange to me that we
spend billions of dollars on our Russia and Ukraine policy, and
yet we do not seem to put real hard dollars into the projects
that are necessary to break these countries free from Russian
dependence.
Senator Shaheen and I were in Serbia about a month ago, and
they were talking about a small project to lessen their
dependence on Russian gas in which their shortfall was $20
million, and there was not a clean way for the United States
make that up. Twenty million dollars is a drop in the bucket
when it comes to the amount of money that we are sending into
the fight in Ukraine. You and I have had this discussion, but
just for the record, should we not as a legislative body be
thinking about giving the Administration additional tools with
which to use on the European continent to try to help some of
these energy independence projects that sometimes have trouble
getting funded through European or private channels?
Mr. Hochstein. Senator, yes, I fully agree. I am not in a
position to tell the legislative branch what to--what to do,
but I think that we--it is sometimes staggering how small the
number is for what we--that would actually make an impact. As
we look at--and I do not want to only focus on the gas side
because you are right. When it comes to Bulgaria and Serbia,
their total demand is 3 bcm a year. That is it, and we can see
a government in Bulgaria that falls literally on the concerns
for gas sales from Gazprom, the cutoff, where really small
numbers would have helped us to be able to do that.
That does not necessarily mean that the U.S. taxpayers
should pay for gas in Bulgaria. That is not--anyone suggesting
that. To give financing for some facilities that could help
them do that the way that we have done with Ukraine in 2014, to
Romania, the Czech Republic, and some others--Poland--would
like to expand their nuclear power SMRs, which we are
supporting American technologies of SMR that can be deployed
far faster for less money, but need support on the financing
side. Those are things that we can do. Changing around some of
the routes from Central Asia and other places around the East
Med could benefit from our support as well.
So there are things that we can do if we had the resources
and the authorities to do that through the DFC and others.
Senator Murphy. So, listen, I think it is simply
extraordinary what you and your team have been able to do. You
mentioned Bulgaria. Behind the scenes, we have, I think,
provided substantial help and assistance to Bulgaria to try to
manage this energy crisis. I would just argue that there is
more capacity, more tools we could give you. Senator Johnson
and I have written and passed legislation increasing DFC's
capabilities, but we can do more. Can you just have give a
word--my time is up, but can you just give a word on India?
Obviously we have seen this dramatic increase in exports to
India. They are a critical partner. What are the--what does
sort of the future look like of the Russia-India energy
relationship, and what can we be doing together to try to talk
to our friends in India about the consequences of continuing to
ramp up their dependence?
Mr. Hochstein. So obviously, the relationship with India is
critical from energy strategically in the region for a variety
of reasons, and energy is just one of them. In my conversations
with them, I have said, look, I understand--I cannot--we do not
have secondary sanctions that can ban your purchases, but as
you increase your purchases from Russia, I would ask two
things. One, do not go too far, and do not look like you are
taking advantage of the pain that is being felt in European
households and the United States. Second, make sure you
negotiate well because if you do not buy it, nobody else is, so
you have an advantage here. It is a very difficult
conversation----
Senator Murphy. Yes.
Mr. Hochstein. --because the Indian economy is so dependent
on these imports, and their inflation is worse than ours, and
the impact as such a big importer compared to the U.S. being a
producer, it hits them a lot harder than hits us. So it is a
balance. I think there is a ceiling to what they will take and
how much they will increase further, but we will have to see as
we go.
Senator Murphy. I think it is a policy question for this
committee and for this Congress as to whether this has an
effect on our growing enthusiasm for the U.S.-India
relationship and our willingness to look the other way as they
have more deeply integrated themselves with both Russian energy
sources and Russian military equipment.
Thank you, Madam Chair.
Senator Shaheen. Thank you, Senator Murphy. I want to pick
up. Senator Murphy talked about Serbia and what is happening
there. As he said, we were there at the end of April, and
obviously that is--Serbia and the Western Balkans are one of
the places where Russia still has a fair amount of influence
and has the potential to disrupt stability and make things more
difficult, and energy is one of those areas that helps them do
that. Having said that, I have noted with great interest that
President Vucic entered into a very favorable gas agreement
with Putin, and I wondered if we have any sense of whether this
deal was done as part of relations with Serbia and Russia re-
warming, or is it the result of Russia seeing their usual
customer there and being able to continue to sell them the gas
that they need. So do you have any sense of what the
geopolitics around that are?
Mr. Hochstein. I think Russia will offer a discount right
now to anybody who will agree to pay, and anybody who will
agree to sign a contract, they will get a discount. Gas has
traditionally not been about revenues. It has been about
politics. Oil has been about revenues in the Russian system. It
is not they do not want to make money, but that has been sort
of the division of labor between those two.
I am not sure that the agreement with Vucic with Serbia
is--has entered into force yet. It is for a 10-year extension.
I think they got a 6-month extension that has now expired. I
have talked to him around the same time of your visit on the
phone a couple of times. He knows what our expectations are and
that if he wants to continue on his accession to the EU, which
we--which we support him taking the steps necessary for that.
We also think that his alliance with the West and with Europe
needs to be--being cautious of putting his entire basket, even
though it just 3 bcm, into the Russian basket.
However, we are going to have the Bulgaria-Serbia
interconnector complete soon. We are going to have the
interconnector of Greece-Bulgaria complete, by September will
be operational, something that we have been working on for
years. There is going to be a new LNG terminal in Albania and
in Greece. So there will--right now, he has no other options.
There is literally no other interconnect except for Gazprom. So
my hope is that as we go forward, we are going to--we are
showing him that there are alternatives, so please do not get
into a 10-year agreement when within the next few months, I may
have some other options for you.
Senator Shaheen. Well, we also heard from President Vucic
that he was very interested in ending Russia's majority role in
the oil company, NIS, and would that--if he is successfully
able to do that, will that have any impact on Russia's oil
supplies or the energy relationship between the two countries?
Mr. Hochstein. I think that would be a really good step to
take towards more independence. I am aware of the statements he
made to you on his efforts and to others. I have not seen yet
the action taken, but I think he is under discussions with the
EU, with the Council, and the Commission, for the tools to be
able to do that legally. We will have to continue to follow up,
and I can follow up with you on those conversations separately.
Senator Shaheen. That would great. Can you also go into a
little more detail on what we can do that is helpful in terms
of the Western Balkans and energy issues? We are working on
legislation right now to try and address some of--some of the
concerns in that region, and obviously energy is one of those
big issues. Are there specific aspects of energy that we ought
to be looking at in legislation, or do we think that that is
important as we are looking at legislation for the region?
Mr. Hochstein. Well, first, I think the Western Balkans are
important because I think what we are seeing today is years of
us not paying enough attention----
Senator Shaheen. Right.
Mr. Hochstein. --to the Western Balkans and allowing the
situation continue. We have to be able to marry--I believe we
have to be able to marry our political agenda, our policy goals
with economics. If we ignore the economic side, we will not
achieve the political ends because we cannot ask people to
continuously make very large economic sacrifices for our
political--for political goals with no benefit on the economic
side on the other end of it. So that is why we worked on the
Krk. If you take it as a whole, the Krk LNG terminal now is
operational in Croatia that most people, when I came up to
brief here many years ago, told me it would never happen.
An LNG terminal in Greece. We are trying to see if there
could be a possibility for a LNG FSRU, so a floating LNG
terminal in Albania, redo some of the connections between
Bulgaria and Serbia, and between Greece and Bulgaria ultimately
to Serbia. If I can do all those things, and that can work in
Central Asia to increase the supply from Azerbaijan by
interconnecting and working more closely with in Turkmenistan
and Kazakhstan, and with the agreement from Turkey, you are
looking at a really substantial change of the map if the
infrastructure exists. As we stand today, I do not even have
the infrastructure to deliver energy supplies into the Western
Balkans and to compete.
The Turk Stream 2 pipeline. Everybody talks about Nord
Stream. The Turk Stream 2 is as damaging as Nord Stream was,
and we fought against it really hard. Unfortunately, that got
built, but we have to--we have to counter it with actual
physical volumes that have the infrastructure to get across the
entire region. What I have just described is a huge step
forward, but not enough.
Senator Shaheen. Thank you. Senator Johnson.
Senator Johnson. Do you want to let Senator Van Hollen go?
Senator Shaheen. That would be great. Senator Van Hollen.
Senator Van Hollen. Thank you, Senator Johnson, and,
Senator Shaheen, thank you for calling this hearing. Mr.
Hochstein, thank you for all your great work on this front.
I really want to pick up on a point that Senator Johnson
made earlier and Senator Murphy with respect to those countries
that are taking advantage of the situation in Ukraine. You have
worked very hard, the Administration has worked hard to get our
European partners to put together a plan to reduce and phase
out reliance on Russian oil, and that comes with a price of
higher energy prices, which their people are willing to
tolerate because of the cause. You have other countries that
are increasing their imports of Russian oil at discounted
prices, essentially, in my view, war profiteering. Can you talk
about the Administration's plan? I heard in response to Senator
Murphy, in India you said, well our--we are saying to them just
do not go too far. That does not seem to me to be a clear
enough line here.
We are exploring the idea of secondary sanctions here, and
I want to know what your view is on this question and how
Europeans would respond if we collectively worked on secondary
sanctions to prevent countries--it is not just India--from
essentially exploiting the situation to their benefit while
other countries' population are having to deal with the wartime
sacrifice.
Mr. Hochstein. Well, Senator, I think the most important
part of the policy, really critical for us to succeed in this,
is to focus on the goal of reducing revenues for Russia while
mitigating the negative impacts on the allies at the same time.
That is the hardest part of this is how do you strike that
balance to reduce the revenues and focus on reducing the
revenues for Russia. So I do not necessarily look at it always
as how many barrels have come off the market versus how much
money is he making on it, and how can I reduce that in a way
that mitigates what we are seeing here at home. I mean, look at
the prices of oil of Brent crude, WTI crude here at home, and,
of course, Europe is suffering from massive increases in gas,
which is--are today almost triple the price in the United
States.
So I know I am being a little bit vague on India, and I am
happy to have a separate conversation on the exact nature of
that conversation of what I think is too much and how much
discounts we can push into the system. I can tell you that we
are working with Europe very closely, and they have just passed
the six package of sanctions that includes some sanctions on
insurance and on supplies. We would like to see how we can use
those sanctions to affect the broader market beyond the U.S.
and Europe so that it achieves the goal that you are saying so
that nobody is profiteering from the suffering.
Senator Van Hollen. Right. No, I appreciate that, but we
have to recognize that the reason that certain countries are
getting Russian oil at a discount is because they are not able
to sell that oil into places like Europe because of Europe's
efforts. So it just seems to me that we need to be thinking
about taking stronger action, and I am not talking about any
one country in particular. I am talking about any country----
Mr. Hochstein. Yes.
Senator Van Hollen. --where they are dramatically
increasing their purchase of Russian oil. I understand the
volume price issue, but, again, the fact that they are--
Russians are getting less for their oil from those countries is
a direct result of the fact that other countries are paying
more.
If I could turn quickly to the situation in Lebanon, which,
as you well know, and we have had conversations in the past
about this, is a huge--continues to be a huge economic problem.
A while back, Hezbollah worked to exploit the energy shortage
situation by trying to bring in uranium and oil from other
places. Our ambassador to Lebanon, and you, and others came up
with a more innovative approach to try to transfer Egyptian gas
and Jordanian electricity in Lebanon in a way that still would
not benefit the Assad regime. Can you provide an update on
where we are? This process has taken a lot slower than some of
us hoped.
Mr. Hochstein. It sure has been a lot slower than some of
us hope, and I am one of those. We have given them a--some
comfort and preclearance to, based on the information we had,
to move ahead on the sanctions, but I want to be clear that
that will be determined when the contracts are signed. Lebanon
has been negotiating with Egypt. I believe those negotiations
are now complete. The negotiations with Jordan are complete.
The arrangement of the barter agreement with Syria, I believe,
is near completion. They will be meeting this week. My hope is
that over the next 10 days, 2 weeks or so, they will see if
they can reach an agreement.
What makes it so difficult is that in order to stay out of
the--benefiting Assad, this makes it very, very difficult, and
that is why it has taken such a long time. I have been very
consistently in touch with all parties. I am hoping that we can
get it there because a total collapse of Lebanon is not in the
interest of any of the countries in the region or the United
States. I believe that is--that is a unanimous view in the
region that we have to do that. Today, Lebanon only has about 4
to 5 hours of electricity per day, so if we do not step into
that breach, someone else will, and someone else has plans to,
as you mentioned already, so we need to work efficiently.
We also have some other instability in Lebanon today
between--as we have seen in the press, between Lebanon,
statements that they have made about a ship arriving in Israel,
and we hope that that does not escalate further. We have asked
for everyone to just maintain the discussions, and we are
hoping that we can resume our negotiations and mediation
between Israel and Lebanon very, very quickly in order to calm
things down from escalating further as they did rhetorically
over the last few days.
Senator Van Hollen. Well, thank you for your efforts to
push this forward, and, Senator Johnson, thank you again.
Senator Shaheen. Thank you, Senator Van Hollen.
Senator Johnson.
Senator Johnson. You are more than welcome. More numbers.
Does the Administration have any estimate in terms of what the
war in Ukraine is costing the West on a monthly basis or any
basis?
Mr. Hochstein. I do not have that number. I assume that
that number exists somewhere between our support and the
economic--the economic destruction in the energy market, food
markets, and inflation, but would have to--I would have to have
those who have that get back to you.
Senator Johnson. That would be a useful piece of
information.
Obviously, the human toll is incalculable. Do you have any
estimation terms of the--just the economic--the just, not
economic, but infrastructure, I mean, just the damage done to
Ukraine, what it is going to cost to rebuild?
Mr. Hochstein. Oh, I--again, I would have to get back to
you on that number, but it is--you have seen the images that we
have all seen. You have had the secure briefings on the damage
to the infrastructure. It is immense.
Senator Johnson. It is hundreds of billions. I am hoping we
do not start using the ``T'' word.
Mr. Hochstein. Yes.
Senator Johnson. I mean, that is basically what we are
talking about, right?
Mr. Hochstein. Yes, for sure.
Senator Johnson. So the reason I bring it up is, and the
reason I had my earlier round of questions is to just kind of
lay out here is the reality of the situation. As much as we
would like to put the squeeze on Russia, it is very difficult
to do so. People need oil. People need gas. People need energy.
So it is just a shell game. You are just substituting I, and,
yes, their revenue declines, but that is what is going to
happen. So from my standpoint, I am kind of looking ahead,
hoping at some point in time this war ends, then our attention
is going to be turning to rebuilding Ukraine.
Mr. Hochstein. Yes.
Senator Johnson. It is going to cost hundreds of billions
of dollars. Where are you going to get that money? From my
standpoint, the best place to get that money is some kind of
royalty off of Russian oil sales. Again, I am not saying this
is going to be easy to implement, but we are already seeing
Europe is willing to pay $120 a barrel while somebody else is
paying $70. Gas prices, oil prices go up and down all the time.
So is the Administration kind of looking ahead that way, and do
you have any imaginative ideas in terms of how you can fund the
rebuilding of Ukraine, potentially by using Russian oil and
gas?
Mr. Hochstein. We are taking a look on a variety of options
that go along the lines of some of the things that you have
just said of looking how we can think on both of those issues,
of the revenues to Putin, but also looking at--the day ahead of
what happens and how do we generate revenues that will--can be
used for reconstruction. I think they are not mature yet for a
discussion here. We are also having that conversation with our
European allies at the Commission and the member states, and
with some of the G7 allies around the world to identify and to
address that.
I think that the comments you have made are spot on and
things that we are really looking at trying to come up with
creative solutions to make sure that it works not just on
paper, but in the--in the reality of the markets, that it is
enforceable and works.
Senator Johnson. Okay. Well, I am glad you are thinking
about it. I would not expect you to have a plan. I mean, it is
going to be incredibly difficult to negotiate something, but as
long as--I mean, I cannot think of a better source of revenue
for that kind of rebuilding.
In our full committee hearing on Ukraine, I was really
asking about the food--the grain situation. It did not sound
like they were too many answers. I have not seen too many
answers. I have seen some calls from the press for military
flotilla to bring the grain out through the ports. There is
rail, that type of thing. What is the current status, because
we do not have months and months? We have got days and weeks
before you are really facing severe food shortages around the
world.
Mr. Hochstein. So we have a significant team that is
working on it together with Ukraine, and with the EU, and
specifically the European countries, right there to see how
much we can get out as fast as possible. Obviously, Putin
allowing ships to lift the blockade and allowing ships to leave
the port would--that would--and not starve the rest of the
world and cause so much damage to the global food supply would
be the easiest ways to do it. We are trying to see how much
grain we can get out and at what pace, and then how fast we can
do it. I think that is a top-of-mind effort.
I will say on food security, the food energy nexus is quite
significant, and I will tell you just yesterday, one of the
U.K. companies shut down a fertilizer plant because of the high
cost of natural gas. So we saw a number of plants shut down in
September, and, again, in November, which is why I was able to
see that we are going to--we were warning in the press in
September and October that there will be a--there could be a
food crisis if natural gas prices do not come because of that
nexus. So we have these two issues. One is the supplier--that
is, Ukraine and Russia being such a large supplier to the
world, and the second, fertilizer plants and other things
that--and the diesel required for planting season. All of these
are very closely linked between energy prices and the food
prices.
Senator Johnson. So I take from your answer the
Administration is really looking at alternate modes of
transportation than the normal one, which should be using the
sea. Any quick estimates in terms of what percentage of the
grain you can get out of the silos right now so they have a
place to store the winter wheat when they harvest it?
Mr. Hochstein. Again, I will talk to the team that is doing
that, and I think they do have an estimate for that, so I will
make sure that you get that.
[The information referred to above follows:]
Ukraine currently has approximately 20 million tons of grain in
storage. Overland routes have to-date moved at most 1.7 million tons
per month. We are in close touch with Ukraine and European partners on
grain transportation and storage needs, and how to meet them.
Senator Johnson. I am assuming it is also safe to say there
is really no serious discussions about having a military escort
for much--merchant ships and forcing our way in there?
Mr. Hochstein. I will leave that discussion to a
different--to a different venue and people to discuss that.
Senator Johnson. Okay. Well, appreciate your testimony.
Mr. Hochstein. Let me just add, I was--just to answer your
question from before, the estimate--the IEA's estimate is that
Russia earned about $20 billion a month this past year on oil
and gas revenues.
Senator Johnson. Thank you.
Senator Shaheen. I think I only have a couple more
questions. I do not know if Senator Johnson does, so we will
finish up very quickly. I did want to ask about grid
interconnectedness and--because one of the things I was very
pleased to see was that Ukraine was able to disconnect from
Russia's energy grid and get into Europe's. I think it was at
the Helsinki Commission hearing this week that one of the
people testifying suggested that one of the things that would
be really helpful would be to have France--if France were to
allow the grid interconnection to Eastern Europe so that the
LNG from Spain could actually reach through. I know the MidCat
Pipeline project also is in there, so it would take a number of
steps, but how likely is that? Are negotiations under way to
address that, and what is the progress? Do we think that France
is interested in allowing that energy to pass through to
Eastern Europe?
Mr. Hochstein. So two very important issues. So in the days
leading up to the invasion, literally, I think, February 20th,
we were finally able, and the Administration was pushing very
hard on everyone involved, to allow for the grid of Ukrenergo,
which is the Ukrainian grid, to connect to Europe. This is
something that we--I tried to work on in 2015 and 2016. Europe
was very resistant to it at the time, competition and so on,
but they gave Ukraine a roadmap, and they fulfilled every
single step. I have to say Ukrenergo was run as a clean,
transparent, and very effective company and was able to fulfill
that.
So we orchestrated a disconnection from Belarus and Russia
in the days leading up to the invasion under the risk that
Russia would not reconnect right after. That went very
successfully. Following that, the ENTSO-E, which the
association in Europe of the TSO, or the transmission system
operators, allowed it to connect. So today, Ukraine is
connected to the EU and not connected to Russia and Belarus,
which was a key strategic imperative. Two, I think that we are
actually at a point where we are going to be able to sell
electricity from Ukraine into Europe this year. That will
create both cash flow, to Senator Johnson's point about
creating some cash flow in Ukraine. That will be able to--and
we can expand that quite significantly, and these are not small
amounts of money for Ukraine. Now sadly, Ukraine has the
capacity to sell. Because of the war, their demand for
electricity in Ukraine has been--is so low under these
circumstances.
As far as France and Spain, look, this is an issue that we
have been talking about for literally over a decade of seeing
if there can be a more mature connection between Spain and
France. Spain has an enormous amount of LNG capacity that is
completely unused because they can transmit the gas to France,
and then the grid can connect from there. I am truly hopeful
that the lessons are learned and that that could finally be
resolved. That has not happened yet, but I am truly hopeful
that that can be addressed.
Senator Shaheen. So are there ways that Congress could be
helpful on that?
Mr. Hochstein. Well, at the end of the day, these are
decisions that France and Spain have to make about physical
interconnection between the two.
Senator Shaheen. Right.
Mr. Hochstein. They have the money to do it, so it is not a
financial issue. I think both countries know the issue quite
well. I think there are political forces at play. I hope and I
am--I am very hopeful that we can see the end of that dispute
and get interconnection done quickly, but, again, it is up to
those two countries.
Senator Shaheen. Sure, but pointing out the folly of what
is happening right now, I think, is important, and as we look
at----
Mr. Hochstein. Madam Chairman, I am sure that you and
your--and senators on this committee, and others will know how
to do that better than I can advise you.
Senator Shaheen. Thank you. Anything else you want to ask?
Senator Johnson. I would ask if on behalf of Senator Risch,
he would like a fact sheet from the Count on Coal organization
be entered in the record, and I have a letter from the MC of
Poland as well as one from the Center for European Policy
Analysis to be entered. I ask consent to enter those in the
record.
Senator Shaheen. Yes, and, in fact, we would like to extend
the opportunity for folks to enter items into the record for--
until Monday because we have reached out to a number of our
European allies and asked if they would like to submit
testimony, and so we do have some of that testimony coming in.
So without objection, we will certainly do that.
[Editor's note.--The information referred to above can be found
in the ``Additional Material Submitted for the Record'' section
at the end of this hearing.]
Senator Shaheen. Senator Portman made it in just under the
wire, so I will call on you if you are ready.
Senator Portman. Well, thank you. First, thanks to the
witness and to Chairman Shaheen and Ranking Member Johnson for
holding this hearing. It is really an important topic.
We are now in the 106th day of the war against Ukraine. I
just met with a bunch of Ohioans who are Ukrainian Americans,
who are very frustrated by what they see in Ukraine with the
Russians have superior weapons, and then with our sanctions
against Russia, the global sanctions, not being as effective as
they should be.
I focus a lot on this issue of energy because that is where
most of the money is coming from to fund the war machine: $870
million a day roughly coming from Europe alone to the coffers.
With big profit margins, that enables Putin to continue to
fight this war without the kinds of consequences that I would
hope we could put in place. So good that European Union is
beginning to, over a 6- to 8-month period, wean themselves away
from Russian oil, but too little too late. So that is--that is
my big concern is that we are not doing what we need to do to
be able to actually have the Putin regime feel the pain. Ten to
12 percent reduction in their economy, 40- to 50-percent
reduction in the Ukrainian economy, as an example, over the
past 106 days.
So, Mr. Hochstein, I understand you are currently serving
as a senior member of the U.S.-European Union Task Force on
Energy Security, and, again, I have said positive things about
that, but also said they need to move more quickly. Can you
please provide us just a brief update--maybe you already have--
and specifically what is in this work plan? We have not seen
publicly what is actually in the work plan. I would love if you
could provide me with the updates of the progress of this task
force as we go forward, but wonder if you could give us a
report--maybe you already have today and I missed it--but
specifically on what the work plan is.
Mr. Hochstein. Sure, Senator. So the task force, we have a
mechanism called the U.S.-EU Energy Council, which addresses a
sort of long-term relationship between the United States and
the EU. So the task force was created to--not to disrupt that
work as--in the long term, but rather to address things are the
immediate concern. I co-chair the task force with the
president--EU Commission President von der Leyen's chief of
staff, Bjoern Seibert.
We are looking at two parallel things that we want to
achieve through this task force. One is to increase the amount
of gas flowing into Europe on an immediate basis. We have
committed to try to--from the U.S. to try to increase that by
15 bcm this year. That is not just LNG from the U.S., but the
U.S. using our diplomatic efforts and creative thinking to
provide that gas through the pipeline and LNG from around the
world. I think we are making significant progress towards
that--towards that goal. Second, we want to be in a--in a place
where we can increase the supplies of LNG to Europe by 50 bcm--
``Five Zero''--by the end of the decade. To do that, though,
Europe has to take its own steps. It has to build the
infrastructure, which it had not done, and it has to sign
contracts that are--be willing to sign long-term contracts.
You are seeing that work being done in Germany. They have
announced the creation of two new LNG terminals. They are going
to have three or four floating LNG terminals for the interim
that should start operating--a couple of those start operating
by the end of this year. So that is some of the commitments
that the task force started working on.
Senator Portman. So could I interrupt you there because I
have heard so many different estimates as to how long it is
going to take to get these import terminals, in effect, in
position. You are saying it could happen in the next 6 to 8
months?
Mr. Hochstein. So there are different kinds of terminals.
So there is the onshore, full-time terminal.
Senator Portman. Yes.
Mr. Hochstein. That takes years to do.
Senator Portman. Yes.
Mr. Hochstein. That takes 5 years to build.
Senator Portman. Yes.
Mr. Hochstein. In the interim, if you can get a ship that
comes in, docks in your port, you have an interconnection that
you build a short pipeline, that can be done within a matter of
under a year. So we are going to see a couple of those in--a
couple of those in Germany. Excelerate, an American company,
just signed a contract with Finland. It is going to have one
hopefully in October connected to Estonia and then move to
Finland to address the Finland-Estonia Baltic markets. So these
are the kinds of things that we are going to try to do.
We work with the Norwegians, and there is an increased--
there is already an announced increase of 5 bcm from the field
and--an LNG terminal and field in Norway that is coming on--
that is coming online now. It is in its final stages. That will
do about 5 bcm. Working in North Africa and the East Med,
Israeli gas through Egypt and Jordan to get to Europe as well.
So those are the kinds of things on gas.
Second, as we--I talked about a little bit earlier, we also
have to reduce the demand for gas using far better technology,
efficiency standards. There are things that we can do on an
immediate basis, some with American companies, some Asian
companies that have the technology to do that. Europe buys 140
bcm of pipeline gas from Russia. That is not something that is
easy to replace under the current market.
Senator Portman. Are we going to meet our goal of adding 15
to that this year?
Mr. Hochstein. I believe so.
Senator Portman. I see that between January and April, we
increased about 18 percent of our LNG exports, 74 percent of
which is going to Europe. Is there enough infrastructure to be
able to absorb what we are--what we are sending, these
increased amounts?
Mr. Hochstein. So for now, yes, but if you look at every
available terminal today, the capacity is full.
Senator Portman. Yes.
Mr. Hochstein. That is why we are working with them on how
do you address the capacity, and there may be another LNG
terminal that we can get in place by the end of the year in
Albania. So we are trying to see what we can do with the
available infrastructure----
Senator Portman. Yes.
Mr. Hochstein. --the increase of immediate infrastructure
as well as long-term infrastructure, and then make sure that
the gas is available to supply it.
Senator Portman. Well, it sounds like we are not going to
have enough gas to replace, as you say, this incredible
dependency that they unfortunately developed with Russia. So
thinking outside the box, and then I will end my questioning--
thank you guys for your indulgence--what else? I mean, we--you
mentioned energy efficiency. That is fine. They are more
efficient than we are already, but there are technologies to
help on that. One thing that--some of these countries are still
using nuclear power plants, in particular, Romania. I was just
in Romania last week. They are going from 20 to 40 percent
nuclear. They want help from us, by the way. Please help us
with EXIM Bank to provide them the loan they need to make that
happen. They are kind of frustrated with the U.S. since they
left the Chinese company and decided to go with us. We need to
help them work.
What else can we do? Hydrogen technology? I mean, is there
something else we can do to sort of leap frog this? Otherwise,
it seems to me we are going to be playing a game of catch-up.
Mr. Hochstein. I agree completely. So first, I think they
are not necessarily more efficient than we are. I think we are
more efficient.
Senator Portman. I am talking about residential----
Mr. Hochstein. Yes, me, too.
Senator Portman. --energy efficiency standards.
Mr. Hochstein. Well, the standards are there, but because
they do not use things like smart thermostats, because they do
not----
Senator Portman. Okay. Good. That is good. So there is--
there is an opportunity to do more.
Mr. Hochstein. So we are working with the American private
sector and others to see how we can surge and make the
adjustments to these technologies, that they fit the European
models.
Senator Portman. Yes.
Mr. Hochstein. I want to touch on Romania because I think
this is critically important. They did--we supported their
effort on SMR----
Senator Portman. Yes.
Mr. Hochstein. --on modular reactors. They are right to be
frustrated with us. I am in touch with them directly. I think
that is a key thing for U.S. to support is advanced nuclear and
not regular--not just traditional. As we go into SMR, I think
Czech Republic, Romania, Poland, seeing how much we can do to
be helpful there, they need the support financially from us,
not just from EXIM Bank, but there are feed studies that need
to be done that we should be helping finance through existing
DFC, EPA, et cetera.
Senator Portman. DFC.
Mr. Hochstein. That is something that I think will be a
step change in dependency because electrifying the entire
heating system is going to be extremely difficult. So we have
to get that step of electrifying and then supplying the
electricity.
Senator Portman. Yes. Well, thank you for being an advocate
for moving ahead aggressively there since they have, again,
made a decision to go with us rather than China. We got to step
up, and that will be a model, as you say, a template for the
region. They also built cell energy to places like Moldova, who
are desperate for it and do not want to be so dependent on
Russia and the Transnistria plant. So thank you very much for
your advocacy of that, and let us know if we can do anything to
be helpful. Thank you.
Senator Shaheen. Thank you, Senator Portman. Again, I want
to thank Ranking Member Johnson for sitting on this hearing
with me. Thank you very much, Mr. Hochstein, for your excellent
testimony this morning. Obviously there is more work we have to
do, and this subcommittee stands ready to help in any way that
we can.
We will leave the record open until 5:00 p.m., close of
business on Monday, June 13, for additional testimony.
Senator Shaheen. With that, this hearing will close.
[Whereupon, at 11:38 a.m., the subcommittee was adjourned.]
----------
Additional Material Submitted for the Record
______
Responses of Mr. Amos Hochstein to Questions
Submitted by Senator Robert Menendez
Question. On March 25, the Biden administration committed to
delivering 15 bcm of gas to Europe this year, and 50 bcm per year
between 2023-2030. This is what Europe has asked for, and that's what
the U.S. has agreed to provide. To clarify a couple of points you
raised during the hearing:
Does the U.S. intend to facilitate the shipment of 50 bcm
per year to Europe starting in 2023?
In order to secure this 50 bcm per year to Europe, do EU
member-states need to sign new long-term contracts with
suppliers, or are pre-existing contracts sufficient?
Is the entirety of the 50 bcm produced in the United States,
or is part of the 50 bcm gas produced elsewhere with contracts
to Europe being facilitated by the United States?
Answer. Through the U.S.-European Commission Joint Task Force, the
United States committed to working with international partners and is
striving to ensure additional LNG volumes for the EU market of at least
15 billion cubic meters (bcm) in 2022, with expected increases going
forward. The Commission has committed to work with EU Member States
toward the goal of ensuring--until at least 2030--demand for
approximately 50 bcm per year of additional LNG supplied from the
United States. Through the Task Force, the United States and the
Commission have hosted meetings with industry representatives and EU
Member States to explore how we can achieve these goals as soon as
possible and determine steps and agreements needed to meet these
objectives.
Question. Does the U.S. need to build `more' LNG export terminals
beyond the facilities that are either in operation or permitted but not
yet constructed by the projects' proponents to deliver on this
commitment?
Answer. U.S. companies that export liquified natural gas (LNG) will
make that decision by themselves based on global demand. U.S. LNG
export facilities under construction and permitted will add a total of
more than 24 million tons per annum of capacity.
Question. Do you foresee a need for U.S. gas producers to expand
operations, beyond what the industry in currently producing--or has
leases and permits to produce, to meet this commitment (giving
consideration to meeting existing export contracts and projected
domestic demand)
Answer. The U.S. Energy Information Administration forecasts U.S.
production will increase 5 percent from 2020 to 2030 to meet expected
increases in U.S. natural gas exports. U.S. domestic natural gas demand
is forecasted to be essentially unchanged through 2030. The nature of
shale production requires ongoing drilling of new wells. Only 10
percent of oil and gas drilling is on federal lands; the other 90
percent is on private lands, so any additional leases or permits would
be overwhelmingly on private land.
Question. How do you predict the explosion and temporary closure of
the Freeport LNG plant will impact the USG's ability to meet our LNG
commitment to our European allies? How will the Administration ensure
this 15 bcm commitment is met?
Answer. We are heartened that no one was injured in the explosion
or aftermath at Freeport LNG's liquefaction plant on Quintana Island,
Texas. We are hopeful that Freeport LNG will be able to resume
operations in a timely and efficient manner and continue to meet the
energy demands of its customers in Europe and other markets. As
outlined in the March 25 joint statement on the U.S.-EU Joint Task
Force, the United States is committed to helping the EU source an
additional 15 billion cubic meters (bcm) of LNG in 2022 by working with
international partners. We have not committed to providing that
additional 15 bcm solely through U.S. LNG exports. We are optimistic we
will be able to reach our stated goal through our current outreach.
Question. Is it fair to say that Europe is committed to expediting
its transition to clean, zero emitting sources of energy and that all
European countries recognize the imperative of taking ambitious action
to combat climate change--even if some countries, Poland for example,
call for more time and support to meet Europe's ambitious goals?
Answer. Yes, Europe is committed to its clean energy transition and
combatting climate change. The EU's Climate Law, which went into effect
in 2021, creates a legally binding requirement for the EU to reach net-
zero greenhouse gas emissions by 2050. The EU's Fit for 55 package sets
an intermediary goal, mandating a 30 percent reduction in greenhouse
gas emissions compared to 1990 levels by 2030. Each EU member state has
a national Energy and Climate Plan of how to reach national and EU
greenhouse gas emissions targets. Poland and the United States are
collaborating to develop nuclear power using U.S. technology to
generate safe, reliable, zero-emission baseload electricity to ease
Poland's transition away from coal.
Question. Given the EU's commitment to not just end dependence on
Russian gas and oil, but to drastically cut the EU's overall fossil
fuel consumption: is it fair to characterize and treat the U.S.
commitment to help supply the EU with LNG as a ``Short-term'' or
``immediate'' response to the European energy crisis?
Answer. As Europe's energy security is threatened by Russia's
continued reductions in natural gas deliveries, assisting our allies
and partners with additional LNG exports is in the U.S. national
interest. Natural gas in alignment with our climate objectives will
continue to play an important role in the global energy mix,
particularly in the near-term. The long-term path to reducing Europe's
dependence on Russian fossil fuels is to reduce overall fossil fuel
consumption and accelerate deployment of clean and renewable energy.
Question. The European Commission recently unveiled a 210 billion
euro plan for Europe to end its reliance on Russian fossil fuels by
2027, and to use the pivot away from Moscow to quicken its transition
to non-fossil fuel energy. How can the U.S. appropriately partner with
the EU, and facilitate U.S. private sector investment, to help Europe
realizer these important LONG-term energy security goals?
Answer. The United States appreciates the EU's ambitious REPowerEU
plan to accelerate the clean energy transition and eliminate its
reliance on Russian fossil fuels. REPowerEU creates an opportunity for
increased U.S. trade and investment in Europe's clean energy
transition. REPowerEU specifically identifies heat pumps, solar
photovoltaic panels, and renewable hydrogen, among other technologies,
to advance Europe's long-term energy security. The United States is
well-positioned to partner with the EU on such clean energy
technologies.
Question. Given Europe's interest to lead on developing zero-
emitting energy, motivated by energy security and climate security
imperatives on quickly reducing fossil fuel consumption, is it
appropriate for the U.S. to encourage Europe to expand its fossil fuel
infrastructure?
Answer. We support the EU's goals to eliminate its dependence on
Russian fossil fuel imports and advance its clean energy transition,
including through efforts such as its May 2022 REPowerEU plan. We defer
to our European partners and allies to make their own decisions about
how to best meet their short-term and long-term energy needs and
climate goals.
Question. Most of Europe is comprised of High-Income Countries.
Understanding that Europe is a critical strategic partner of the U.S.,
what, if any, circumstances would justify the U.S. (through the DFC or
USAID) to provide support or concessional finance for energy projects,
in particular fossil fuel infrastructure, in Europe's High-Income or
Upper Middle-Income Countries? If so, where?
Answer. While the Administration has underscored its preference for
clean energy engagement, in certain cases and depending on the scope of
the engagement and geostrategic objectives, support for fossil fuel
projects may be justified, including for national security reasons.
Addressing the energy crisis facing Europe is a priority, and the
Department, USAID, and the DFC are working tirelessly to support
European energy security and diversification to countries across the
continent impacted by Russia's aggression in Ukraine.
Question. What are we doing to help other countries, more
vulnerable countries, weather the effects of this energy crisis?
Answer. The Department and USAID work diplomatically and
programmatically in countries most vulnerable to impacts of the energy
crisis caused by Russian aggression in Ukraine. We are helping to
increase these countries' access to affordable, clean, sustainable,
secure, and reliable energy. Department and USAID programs promote
energy diversification and decarbonization, including adoption of clean
energy sources, so that vulnerable countries can better mitigate the
impacts of this energy crisis and any future crises.
Question. Are the optics of the U.S. focus on helping Europe
through the energy crisis, and its majority White populations and High
Income Countries, concerning to the Administration?
Answer. The Administration is working tirelessly with partners and
allies around the world to mitigate the consequences of Russia's war of
aggression against Ukraine. The United States and its partners
coordinate efforts to promote energy diversification and
decarbonization globally, including accelerating the adoption of clean
energy sources in vulnerable countries outside of Europe to better
mitigate the impacts of future energy crises.
Question. Given all the sanctions levers the U.S. is justifiably
pulling around the world (Venezuela, Iran, and Russia), do we have the
capacity--should the need arise--to impose more sanctions on additional
countries if other malign actors emerge during this especially
tumultuous time in geopolitics?
Answer. U.S. oil production is expected to increase by more than 1
million barrels per day in 2022. We continue to actively engage with
petroleum-producing states to ensure adequate supplies of crude oil. On
a global basis, spare oil production capacity exists, specifically in
OPEC countries. The Administration worked with other International
Energy Agency (IEA) members to approve the largest collective stock
releases in IEA history, totaling more than 182 million barrels (more
than 1 million barrels per day through October). All of these actions,
plus IEA members' additional 900+ million barrels of strategic reserves
available for future releases if needed, provide tools to mitigate
market reactions, should additional sanctions be required.
______
Responses of Mr. Amos Hochstein to Questions
Submitted by Senator James E. Risch
Question. Despite Maduro's many undocumented crimes and human
rights abuses, on March 5, 2022, a delegation of senior administration
officials met with Maduro to discuss ``energy security.'' Last month,
the Administration allowed European oil companies to ship Venezuelan
oil to Europe to make up for Russian crude. Did you have a role in the
planning or execution of this meeting with Maduro on March 5?
Answer. U.S. officials' March 5 visit to Caracas focused on
securing the release of wrongfully detained U.S. nationals and urging
the Maduro regime to return to the negotiating table in Mexico with the
democratic opposition's Unitary Platform to restore democracy in
Venezuela. We have long made clear that we would review our sanctions
policies in response to constructive steps by the Maduro regime and if
the Venezuelan parties made meaningful progress in the Venezuelan-led
negotiations in Mexico. This action, coordinated with Interim President
Juan Guaido and the Unitary Platform, was only taken to help move
negotiations forward to benefit the people of Venezuela.
Question. Can the U.S. rely on Maduro for its energy security?
Answer. The United States does not rely on Venezuela for energy
security. Prior to the imposition of U.S. sanctions, about 10 percent
of U.S. crude oil imports originated from Venezuela. Venezuela's oil
production has fallen from around 2.8 million bpd in 2013 to an
estimated 636,000 bpd in 2021, following U.S. sanctions and as a result
of corruption and mismanagement of the oil sector. Our Venezuela-
related sanctions, including on PDVSA, remain in effect. The United
States continues to recognize the Interim Presidency of Juan Guaido and
the 2015 democratically elected National Assembly and remains committed
to supporting Venezuelan democratic aspirations while addressing the
humanitarian crisis caused by the Maduro regime.
Question. Can Europe rely on Maduro for its energy security?
Answer. Europe does not rely on Venezuela for energy security.
Prior to the imposition of U.S. sanctions, a very small percentage of
European crude oil imports originated from Venezuela. Venezuela's oil
production has fallen from around 2.8 million bpd in 2013 to an
estimated 636,000 bpd in 2021, following U.S. sanctions and as a result
of corruption and mismanagement of the oil sector. Our Venezuela-
related sanctions, including on PDVSA, remain in effect. The United
States continues to recognize the Interim Presidency of Juan Guaido and
the 2015 democratically elected National Assembly and remains committed
to supporting Venezuelan democratic aspirations while addressing the
humanitarian crisis caused by the Maduro regime.
Question. Can you explain the logic of replacing Putin's war-
tainted oil with Maduro's narco-terrorist tainted oil?
Answer. We remain steadfast in our commitment to the Venezuelan
people, which includes supporting their democratic aspirations and
providing assistance to address Venezuela's humanitarian crisis. We
have long made clear that we would review our sanctions policies in
response to constructive steps by the Maduro regime and if the
Venezuelan parties make meaningful progress in the Venezuelan-led
negotiations. Venezuelan-led negotiations between the Maduro regime and
the Unitary Platform represent the best path to restore to Venezuelans
the democracy that they deserve, and to alleviate their suffering.
Question. The Idaho National Labs have been pioneers in developing
SMRs. As Europe faces down the prospect of its short-term energy
shortages and looks to replace Russian oil and gas in the long term, I
am curious about the potential SMRs have in Europe. How seriously is
Europe looking at utilizing SMRs in their power mix?
Answer. Several European countries are actively pursuing the use of
small modular reactors (SMRs) in their power mix. As SPEC Kerry and
Romanian President Iohannis announced at COP 26 last November, Romania
is partnering with the U.S. firm NuScale to deploy a first-of-a-kind
SMR in partnership with the Romanian nuclear power plant operator, SN
Nuclearelectrica S.A. (SNN). In May, SNN shared the results of a USTDA-
funded feasibility study and announced plans to develop the first SMR
on the site of a decommissioned coal-fired power plant near the
capital, Bucharest. U.S. companies are exploring projects and have
signed initial memoranda of understanding with private and public firms
in the UK, Poland, Czech Republic, and Bulgaria.
Question. Is the U.S. encouraging Europe to use SMRs for their
power?
Answer. The United States is actively encouraging European
countries to use SMRs for electricity production, clean hydrogen
generation, district heating, industrial process heat, and water
desalination. The State Department, through the Fundamental
Infrastructure for the Responsible Use of Small Modular Reactor
Technology (FIRST) program, is providing technical capacity-building
support to Romania, Bulgaria, Estonia, and Latvia and is developing
regional projects to bring in other European partners. We also
coordinate closely with other U.S. Government agencies, including
Energy, Commerce and USTDA, to provide additional support and technical
coordination and to increase partner country demand for U.S. SMRs.
Question. What are the major regulatory hurdles to getting SMRs
running in Europe?
Answer. Europe, like many jurisdictions around the world, is just
beginning the process of developing regulatory frameworks that allow
for licensing and permitting of appropriate, safe, and secure use of
SMR technology. The Department of State, along with the Departments of
Commerce and Energy, and the Nuclear Regulatory Commission, are
engaging closely with our European partners to promote closer
regulatory cooperation and to ensure that U.S. firms can compete on a
level playing field for opportunities in Europe.
Question. Does the Administration believe that Nord Stream 2 is not
a regular commercial project, but is in fact a geopolitical tool of the
Russian Government?
Answer. The Administration has long maintained that Nord Stream 2
is a geopolitical project that--if made operational--would harm the
energy security of Ukraine and Europe more broadly.
Question. Does the Administration believe that Nord Stream 2 has
been permanently stopped?
Answer. Germany's February 22 decision to take administrative steps
to halt the certification process for Nord Stream 2 (NS2) prevents the
pipeline from becoming operational. Secretary Blinken concurrently
imposed sanctions on Nord Stream 2 AG (NS2AG), its CEO Matthias Warnig,
and NS2AG's corporate officers, ensuring NS2 would not move forward
after Russia's full-scale invasion of Ukraine. Furthermore, Germany is
working urgently to reduce its overall energy dependence on Russia and
has committed to eliminate its imports of Russian gas by mid-2024.
Question. How will the Administration ensure the project will not
be reopened should political will in Germany shift in favor of that
action?
Answer. The Administration has remained in close coordination with
Germany on Nord Stream 2, including in the lead up to Germany's
decision to halt the certification progress for the pipeline and our
action to revoke the sanctions waiver against Nord Stream 2 AG and its
CEO Matthias Warnig. These coordinated actions prevented the pipeline
from becoming operational and illustrate that our bilateral cooperation
has continued and strengthened. We will continue to further our already
robust coordination and cooperation with Germany and other European
Allies and partners on shared efforts to reduce Europe's dependence on
Russian fossil fuels, including related to Nord Stream 2.
Question. Does the Administration support making Nord Stream 2
sanctions permanent?
Answer. The Protecting Europe's Energy Security Act (PEESA), as
amended, mandates continued identification of individuals and entities
that knowingly engage in sanctionable conduct as related to Nord Stream
2 (NS2). The Administration remains committed to implementing PEESA, as
amended, and has sanctioned 10 persons related to NS2's construction
and identified 17 of their vessels as blocked property. The
Administration continues to examine entities potentially engaged in
sanctionable behavior. President Biden committed that NS2 will not move
forward after Russia's full-scale invasion of Ukraine.
Question. I'm deeply concerned with this Administration's support
for energy projects that would benefit the Assad regime. Specifically,
the movement of Egyptian gas through Jordan and Syria into Lebanon.
Some sources cite an 8 percent transit fee payable to Assad. What is
State's legal interpretation of ``in-kind'' benefit to the Assad
regime? How is this distinct from the legal definition of ``direct
benefit'' pursuant of the Caesar Act?
Answer. I would respectfully refer you to the Department of the
Treasury and Office of Foreign Assets Control as the lead U.S.
Government agency for sanctions for legal interpretations of statutory
terms. We have not lifted or waived Syria-related sanctions in this
case. The Departments of the Treasury and State will review the final
contracts from the parties, as well as the final financing details from
the World Bank, to ensure this agreement is in line with U.S. policy
and addresses any potential sanctions concerns.
Question. Please provide an overview of the process involved in
determining whether an individual transaction is assessed to provide
``in-kind'' vs ``direct'' benefit.
Answer. I would respectfully refer you to the Department of the
Treasury and Office of Foreign Assets Control as the lead U.S.
Government agency for sanctions for legal interpretations of statutory
terms and the process involved in making determinations.
Question. You have asserted these deals are exempt from sanctions
because Assad is likely to be paid ``in-kind,'' not in cash, for his
participation in these deals. How do so called ``in-kind''
contributions to the Assad regime not constitute a direct benefit as
defined under the Caesar Act?
Answer. As Secretary Blinken has made clear, we have not lifted or
waived Syria-related sanctions in this case. Our understanding from the
draft agreements is that the Assad regime will receive in-kind payments
of natural gas, and potentially electricity, worth additional minutes
per day of power. The Departments of the Treasury and State will review
the final contracts from the parties, as well as the final financing
details from the World Bank, to ensure this agreement is in line with
U.S. policy and addresses any potential sanctions concerns.
Question. How do the agreements related to the Arab Gas Pipeline
that run through Assad-controlled territory in Syria not circumvent the
spirit of the Caesar Act, which was passed by U.S. Congress as a means
of denying all benefit to the Assad regime?
Answer. The Administration is fully committed to upholding legal
obligations under the Caesar Act. Our sanctions are important tools as
we seek to promote accountability for the Assad regime's atrocities,
some of which rise to the level of war crimes or crimes against
humanity. Under the proposed arrangements being negotiated by Jordan,
Egypt, and Lebanon, we understand the Assad regime would receive no
cash. Instead, it would receive in-kind gas/electricity for transiting
Syrian territory. Treasury and State will review the final contracts
from the parties, as well as the final financing details from the World
Bank, to ensure this agreement is in line with U.S. policy and
addresses any potential sanctions concerns.
Question. How does this Administration plan to ensure the ``in-
kind'' benefit to the regime will not be diverted to chemical weapons
facilities, military bases, or prisons run by the Assad regime or its
backers?
Answer. The Departments of the Treasury and State will need to
receive the final contracts from the parties and the final financing
details from the World Bank before reviewing the details to assess any
possible sanctions concerns. Under the proposed gas and electricity
arrangements, we understand the amount of gas/electricity the Syrian
regime would receive in-kind would add a matter of minutes of
electricity to Syria per day. With regard to the Syrian regime's
military apparatus, the United States will continue to use all
available tools, including Caesar Act sanctions, to further press for
accountability for the ongoing atrocities of the Assad regime.
Question. The Arab Gas pipeline physically feeds Assad's military,
intelligence, and detention facilities--in addition to civilian
infrastructure. How does the pipeline not contribute to continued
atrocities against the Syrian people given its physical proximity to
these sites?
Answer. With regards to the Assad regime's military apparatus, the
United States will continue to use all available tools, including
Caesar Act sanctions, to further press for accountability for its
ongoing atrocities. The Departments of the Treasury and State will
review the final contracts from the parties, as well as the final
financing details from the World Bank, to ensure this agreement is in
line with U.S. policy and addresses any potential sanctions concerns.
Question. Sanctioned Russian State Owned Entities are responsible
for maintenance on the Syrian portion of the pipeline. How does this
Administration plan to ensure the Gas Pipeline project does not benefit
sanctioned Russian entities as they assault Ukraine?
Answer. The Departments of the Treasury and State will review the
final contracts from the parties, as well as the final financing
details from the World Bank, to ensure this agreement is in line with
U.S. policy and addresses any potential sanctions concerns.
Question. How does the Administration plan to address Syria's work
with a sanctioned Russian entity, Stroytransgaz, with known connections
to the Kremlin as it continues to undermine Ukraine's security? Does
this Administration feel waiving sanctions on Stroytransgaz under E.O.
13662 is necessary to repair and maintain the Arab Gas Pipeline?
Answer. Speaking broadly, a number of Syrian and Russian entities
involved in the Syrian economy are designated under various sanctions
authorities. We are aware of reports that the Russian firm
Stroytransgaz was involved in construction of the Syrian portion of the
Arab Gas Pipeline, which was completed in February 2008. Stroytransgaz
has been on the OFAC SDN list since 2014. The Departments of the
Treasury and State will review the final contracts from the parties, as
well as the final financing details from the World Bank, to ensure this
agreement is in line with U.S. policy and addresses any potential
sanctions concerns. As Secretary Blinken has made clear, we have not
lifted or waived Syria-related sanctions in this case.
Question. Given that the Arab Gas Pipeline relies on the use of
sanctioned Russian entities with direct connections to the Kremlin, how
does this Administration justify promoting the Arab Gas Pipeline
Project? How does it plan to maintain consistency in its policy toward
Ukraine?
Answer. We are aware of reports that the Russian firm Stroytransgaz
was involved in construction of the Syrian portion of the Arab Gas
Pipeline, which was completed in February 2008. Stroytransgaz has been
on the OFAC SDN list since 2014. The Departments of the Treasury and
State will review the final contracts from the parties, as well as the
final financing details from the World Bank, to ensure this agreement
is in line with U.S. policy and addresses any potential sanctions
concerns.
Question. How much does Stroytransgaz and its subcontractors stand
to gain from any deal related to the Arab Gas Pipeline financially?
Answer. Speaking broadly, a number of Syrian and Russian entities
involved in the Syrian economy are designated under various sanctions
authorities. We are aware of reports that the Russian firm,
Stroytransgaz, was involved in construction of the Syrian portion of
the Arab Gas Pipeline, which was completed in February 2008.
Stroytransgaz has been on the OFAC SDN list since 2014. The Departments
of the Treasury and State will review the final contracts from the
parties, as well as the final financing details from the World Bank, to
ensure this agreement is in line with U.S. policy and addresses any
potential sanctions concerns.
Question. Given that Stroytransgaz is under sanctions for its role
in destabilizing Ukraine, do you not feel this project runs counter to
the Administration's Russia policy?
Answer. We are aware of reports that the Russian firm Stroytransgaz
was involved in construction of the Syrian portion of the Arab Gas
Pipeline, which was completed in February 2008. Stroytransgaz has been
on the OFAC SDN list since 2014. The Departments of the Treasury and
State will review the final contracts from the parties, as well as the
final financing details from the World Bank, to ensure this agreement
is in line with U.S. policy and addresses any potential sanctions
concerns.
______
Responses of Mr. Amos Hochstein to Questions
Submitted by Senator John Barrasso
Question. Do you believe the U.S. Government should be supporting
an all-of-the-above energy strategy that includes oil, natural gas, and
coal?
Answer. On day one President Biden took executive actions to ensure
we tackle the climate crisis at home and abroad through a whole-of-
government approach. I believe that an ``all of the above'' energy
strategy takes heed of underlying climate concerns, and therefore does
not include highly polluting and highly inefficient sources of power.
U.S. energy security and geostrategic concerns necessitate considering
all energy options, but environmental concerns should be factored in
throughout.
Question. What is the current status of the Nord Stream 2 pipeline
and Nord Stream 2 AG?
Answer. Germany's February 22 decision to take administrative steps
to halt the certification process for the pipeline has prevented it
from becoming operational. On February 28, Swiss Economics Minister Guy
Parmelin announced all Nord Stream 2 AG staff were ``made redundant.''
Nord Stream 2 AG subsequently affirmed it terminated the contracts of
its staff in response to sanctions. I have seen--but cannot confirm--
media reports of Nord Stream 2 AG's intention to declare bankruptcy in
late March 2022.
Question. To your knowledge, has the Government of the United
Kingdom banned or limited access to oil and gas in the North Sea?
Answer. To my knowledge, the Government of the United Kingdom has
not banned or limited access to oil and gas in the North Sea. UK
Government officials promised a new round of licensing later this year,
even though no commercial discoveries have been made or new acreage
awarded in the last decade of licensing rounds.
Question. To your knowledge, has the Government of Norway banned or
limited access to oil and gas in the North Sea?
Answer. To my knowledge, the Government of Norway has not banned
nor limited access to oil and gas in the North Sea. While Norway has
made strides in carbon capture and storage, hydrogen, and offshore wind
for its energy transition, Norwegian Government officials have not made
any decision to set an end date for oil and gas exploration and
production. Specifically, Norway intends to continue to hold regular
licensing rounds, offering exploration acreage to energy firms
according to its long-term energy strategy.
Question. To your knowledge has the Government of the Russia banned
or limited access to oil and gas in the North Sea?
Answer. No, to my knowledge, the Government of Russia does not
control access or hold licensing for oil or gas production in the North
Sea.
Question. Are you aware of any OPEC country that has banned or
limited access to oil and gas resources?
Answer. Many OPEC countries either restrict oil and gas production
to the national oil company or require oil and gas producers to partner
with the national oil company in order to develop oil and gas
resources. This is also true of many non-OPEC countries.
Question. Has China banned access to its critical mineral
resources?
Answer. The People's Republic of China (PRC) has not explicitly
banned access to its critical minerals and, since 2015, has abolished
export quotas in compliance with a World Trade Organization ruling that
found PRC Government policies were unfairly benefiting its domestic
mineral industry. The PRC strictly controls the trade of mineral
processing equipment, technology, and expertise through patents and
export restrictions, and imposes production quotas on domestic mineral
mining and separation. These export restrictions on equipment and
expertise inhibit foreign companies in the sector from easily
challenging the PRC's dominance over the processing stage for several
critical minerals.
Question. Gazprom announced that it was halting gas deliveries to a
number of European countries. What countries has Russia stopped
delivering natural gas to? What actions are those countries taking to
mitigate the impact of being cut off from Russian natural gas?
Answer. As of June 9, 2022, Russia has halted natural gas supplies
to Poland, Bulgaria, Finland, Denmark, and the Netherlands. The EU is
taking concrete steps to reduce dependence on Russian natural gas,
including through its REPowerEU plan, which aims to reduce dependence
on Russian natural gas by two-thirds by the end of 2022 and to
eliminate dependence on Russian fossil fuels before 2030. To mitigate
the impact of Russian cutoffs, the EU is seeking additional natural gas
supply globally, including from Egypt, Israel, Algeria, Azerbaijan,
Nigeria, Senegal, and Angola, in addition to increased LNG imports from
the United States. The EU is also setting out contingency measures in
case of severe supply disruption.
Question. Are European Union member states prepared and able to
meet their needs without Russian imports?
Answer. EU Member States are working to reduce their dependence on
Russian fossil fuels, but this will take time. The EU imported from
Russia more than 40 percent of its total gas consumption, 27 percent of
oil imports, and 46 percent of coal in 2021. The EU is taking steps to
reduce this dependency and establish contingency measures in case of
severe supply disruption, including phased bans on imports of Russian
coal and seaborne oil, and its REPowerEU plan to make Europe
independent from Russian fossil fuels by 2030. We support these efforts
through regular coordination and joint initiatives, such as the U.S.-
European Commission Joint Task Force to Reduce Europe's Dependence on
Russian Fossil Fuels.
Question. Under what circumstances and conditions could European
Union member states stop receiving Russian natural gas imports from
Nord Stream 1?
Answer. Individual EU member states have different levels of
dependencies and options and abilities to reduce them. These efforts
involve numerous steps, including increasing LNG imports from non-
Russian sources, reducing overall energy demand, and accelerating
deployment of renewables and clean energy solutions. These efforts are
difficult and will take time. Beyond European states taking actions to
reduce energy dependencies on Russia, Russia itself could also
preemptively choose to institute further decreases and cutoffs of
natural gas supplies to European states, including through pipelines
such as Nord Stream 1.
Question. Russia is targeting Ukraine's Gas Transmission System and
increasingly using Nord Stream 1 to bypass Ukraine to deliver gas to
Europe. What is the status of Ukraine's Gas Transmission System?
Answer. As of June 9, 2022, Ukraine's gas transmission system--
which is designed to transport Russian natural gas through Ukraine to
Europe--has not been a target of Russia's weapons of war and the gas
transmission system remains physically intact and fully operational.
However, the Gas Transmission System Operator of Ukraine (GTSOU) said
its engineers could no longer safely operate the Novopskov compressor
station due to interference of occupying Russian forces and declared
``force majeure'' on May 10, effectively halting Russian gas transit
through one of two operational cross-border gas transit points at
Sochronivka. Localized natural gas distribution networks have taken
collateral damage in areas of heavy fighting in eastern Ukraine.
Question. With Russia destroying and heavily damaging gas
transmission infrastructure in Ukraine, is Ukraine still able to
reliably deliver natural gas to Europe?
Answer. As of June 9, 2022, Ukraine's gas transmission system has
not been a target of Russia's weapons of war and remains physically
intact and fully operational. Ukraine's gas transmission system is
still able to reliably deliver natural gas to Europe. However, the Gas
Transmission System Operator of Ukraine (GTSOU) said its engineers
could no longer safely operate the Novopskov compressor station due to
interference of occupying Russian forces and declared ``force majeure''
on May 10 and halted Russian gas transit through one of two operational
cross-border gas transit points at Sokhranivka. GTSOU officials offered
to re-route all Russian gas flows from Sokhranivka to the cross-border
point at Sudzha.
Question. The Eastern Mediterranean Pipeline can help enhance
European energy security. Yet, on January 11, 2022, the State
Department announced the withdrawal of U.S. support for the strategic
pipeline. You discussed the project stating you would be ``extremely
uncomfortable with the U.S. supporting this project . . . why would we
build a fossil fuel pipeline between the EastMed and Europe when our
entire policy is to support new technology . . . and new investments in
going green and in going clean?'' You also stated ``By the time this
pipeline is built we will have spent billions of taxpayer money on
something that is not only obsolete but against our collective interest
between the U.S. and Europe.'' Given the need to help Europe diversify
their routes and supplies away from Russian energy resources, what is
the Administration's current stance on the Eastern Mediterranean
Pipeline?
Answer. Putin's aggression in Ukraine and subsequent actions to
disrupt gas supplies to European consumers only underscores our
longstanding position that energy cooperation in the East Mediterranean
provides a foundation for durable energy security and economic
prosperity in the East Mediterranean region and the rest of Europe. We
remain committed to physically interconnecting East Mediterranean and
Middle East energy to Europe. The Administration's stance on the
Eastern Mediterranean Gas Pipeline (EMGP) has not changed. We are
continuing to shift our focus to electricity interconnectors that can
support both natural gas and renewable energy sources. A new pipeline
such as the EMGP, which is not even under construction, would not
contribute to European energy security in the immediate or even medium
term.
Question. What is the status of the Eastern Mediterranean pipeline?
Answer. The East Mediterranean Gas Pipeline (EMGP) is not under
construction and no financing or business case has been identified.
This is an EU project and financing this pipeline is a decision for the
EU and any potential investors to make.
Question. The United States has the energy resources needed to help
our allies reduce their dependence on Russian energy. Our nation should
be a strategic energy supplier to Europe. American natural gas is
reliable, affordable, and abundant. It is an important energy solution
for those who want to keep their lights on without empowering Russia.
Please provide a list of countries you have met with and urged to
increase exports of liquefied natural gas.
Answer. We also see the promise of U.S. liquified natural gas (LNG)
exports as a major component of helping Europe. I have met with many
U.S. LNG exporters and project developers to facilitate more U.S. LNG
exports to Europe to fulfill our commitments to help Europe import 15
billion cubic meters (bcm) of additional natural gas supplies by the
end of 2022 and approximately 50 bcm per year of additional U.S. LNG
supplies, until at least 2030. To fully replace Russian gas, we are
also working with major natural gas producers that currently or
potentially could supply Europe, including Algeria, Australia,
Azerbaijan, Norway, Libya, Qatar, and Trinidad and Tobago. I have met
personally with most to urge them to increase exports of natural gas to
Europe.
Question. Do you support increasing exports of U.S. liquefied
natural gas (LNG) to help our allies and partners escape their
dependence on Russia?
Answer. I fully support the President's commitment to helping our
European allies and partners reduce their dependence on Russian gas,
including through the provision of American LNG, reducing their overall
demand for energy, and accelerating the clean energy transition.
Question. What are the current barriers to increasing exports of
American energy resources to our allies in Europe?
Answer. Energy exports to our European allies have increased
significantly since January 2021. One current logistical barrier
overseas is Europe's lack of sufficient compatible import
infrastructure such as LNG import terminals or Floating Storage
Regasification Units (FSRUs). We are working tirelessly with the
private sector, and our partners and allies to address these capacity
issues. Our European allies and partners already have taken steps to
address existing infrastructure constraints to increase imports of non-
Russian gas.
Question. What steps is the Administration currently taking to
support U.S. energy companies in increasing domestic export capacity
and building the infrastructure needed to increase exports to Europe?
Answer. The Administration has already taken steps to increase U.S.
LNG export capacity, including authorizing additional exports of LNG to
non-free trade agreement countries from two existing facilities, one
under construction and one additional approved LNG project. We are
committed to working with EU member states toward ensuring demand for
approximately 50 billion cubic meters per year of additional U.S.
supplies, until at least 2030, as part of the President's commitment to
the U.S.-EU Task Force for Energy Security. In addition, the United
States and the European Commission will work to expedite planning and
approval for renewable energy projects that will facilitate exports of
U.S. energy technology.
Question. In 2021, Syria, Egypt, Jordan, and Lebanon agreed to a
deal which would import natural gas from Egypt and electricity from
Jordan into Lebanon. Both the natural gas and electricity would be
transported through Syria. Under Secretary of State for Political
Affairs Victoria Nuland said in October 2021, ``one of the energy
solutions that we are working on with Lebanese authorities [ . . . ]
would involve the World Bank and would involve humanitarian relief. So
because it falls under the humanitarian category, no sanctions waiver
would be required in this instance.'' U.S. Ambassador to Lebanon
Dorothy Shea, said that the United States had been active in
facilitating and encouraging the deal. You said during the hearing on
June 9, ``If we don't step into that breach someone else will.'' How is
the U.S. going to ``step into that breach''?
Answer. We are deeply concerned about the prospect of state
collapse in Lebanon. The lack of fuel and power in Lebanon threatens
the delivery of critical services to the Lebanese people. These deals
are about providing them with a more sustainable and dependable form of
electricity. A further deterioration of the situation in Lebanon would
undermine regional stability and U.S. interests. The Treasury and State
Departments will review the final contracts, as well as the final
financing details from the World Bank, to ensure this agreement is in
line with U.S. policy and addresses any potential sanctions concerns.
To receive any financing, the World Bank will require Lebanon to
implement a number of long-overdue reforms to its electricity sector.
Question. What difficulties may there be once the project is
active?
Answer. There are still a number of agreements and approvals,
including the approval of financing by the World Bank's Board of
Directors, that must be finalized before the project can reach the
implementation stage. It would be premature and speculative on my part
to comment on hypothetical difficulties before the project commences.
Question. In 2021, Syria, Egypt, Jordan, and Lebanon agreed to a
deal which would import natural gas from Egypt and electricity from
Jordan into Lebanon. Both the natural gas and electricity would be
transported through Syria. Under Secretary of State for Political
Affairs Victoria Nuland said in October 2021, ``one of the energy
solutions that we are working on with Lebanese authorities [ . . . ]
would involve the World Bank and would involve humanitarian relief. So
because it falls under the humanitarian category, no sanctions waiver
would be required in this instance.'' U.S. Ambassador to Lebanon
Dorothy Shea, said that the United States had been active in
facilitating and encouraging the deal. You said during the hearing on
June 9, ``If we don't step into that breach someone else will.'' Are
there additional U.S. sanctions that may be triggered due to this
deal?''
Answer. Our understanding from the draft agreements is that the
Assad regime will receive in-kind payments of natural gas, and
potentially electricity, worth additional minutes per day of power. The
Departments of the Treasury and State will review the final contracts
from the parties, as well as the final financing details from the World
Bank, to ensure this agreement is in line with U.S. policy and
addresses any potential sanctions concerns.
Question. Recent media reports indicate Italian oil company ENI SpA
and Spanish oil company Repsol SA plan to resume shipments of Venezuela
oil to Europe for debt. Do these actions violate U.S. sanctions?
Answer. As a general matter we remain opposed to any dealing in
Venezuelan oil in exchange for diesel or other products or for debt
repayment. Eni and Repsol jointly operate an offshore natural gas
facility that provides a significant amount of natural gas to the
Venezuelan population. We have determined that it is in our foreign
policy interest to authorize these firms to accept oil as compensation
for current natural gas operations only, without any additional product
swaps. Authorizing these transactions will directly benefit the
Venezuelan people. These transactions will not provide any benefit,
financial or otherwise, to the Maduro regime, and they are consistent
with our current sanctions.
Question. What actions has the State Department taken on reports
about the resumption of oil-for-debt swaps from Venezuela to Europe?
Answer. In response to press inquiries, we have noted we remain
opposed to any dealing in Venezuelan oil in exchange for diesel or
other products or for debt repayment. However, we support issuance of
licenses or other actions when it is in our foreign policy interest to
do so. We continue to recognize Interim President Guaido and remain
steadfast in our commitment to the Venezuelan people, which includes
supporting their democratic aspirations and providing assistance to
address their humanitarian crisis.
Question. What assurances and conditions, if any, has the State
Department agreed to with ENI and Repsol regarding resuming shipments
of Venezuela oil?
Answer. Eni and Repsol jointly operate an offshore natural gas
facility that provides a significant amount of natural gas to the
Venezuelan population. We have determined that it is in our foreign
policy interest to authorize these firms to accept oil as compensation
for current natural gas operations only, without any additional product
swaps. Authorizing these transactions will directly benefit the
Venezuelan people. These transactions will not provide any benefit,
financial or otherwise, to the Maduro regime, and they are consistent
with our current sanctions.
Question. Why is the Biden administration blocking countries in
Africa, some of the most impoverished nations, from using traditional
energy resources to build their economies through grants and loans at
the World Bank and the African Development Bank?
Answer. Administration guidance on energy projects informs our
voting position in multilateral development banks and centers on
promoting clean energy, advancing innovative technologies, boosting
U.S. clean technology competitiveness, and providing financing and
technical assistance to support net-zero transitions worldwide.
Investment in carbon-intensive energy is no longer the best solution
for many African countries from an economic or environmental
perspective. Where there are no viable alternatives, engagement on a
carbon-intensive energy project may still be necessary to protect U.S.
national security or advance development goals, especially in Africa
where energy access is a huge challenge.
Question. How important is providing reliable baseload energy in
assisting countries in Africa with economic growth, job creation and
poverty reduction?
Answer. More than 600 million people in Africa lack access to
reliable, affordable electricity, and lack of reliable power stunts
economic growth and social development goals. Africa's electricity
access is constrained by governance challenges and a lack of investment
that have resulted in inadequate generation, transmission, and
distribution infrastructure. We work diplomatically and
programmatically, and in partnership with Power Africa, to support
efforts to build governments' capacity to manage their power sectors
and to level the playing field to attract transparent, competitive
investment.
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Letters and Testimonies From European Allies
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
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Fact Sheet, Count on Coal Organization,
Submitted by Senator James E. Risch
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[all]