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Originally published March 5, 2014 at 7:34 PM | Page modified March 6, 2014 at 12:26 PM

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Natural-gas boom gives U.S. new diplomatic tool in Ukraine

The crisis in Crimea is heralding the rise of a new era of U.S. energy diplomacy, as the Obama administration attempts to deploy the recent boom in domestic natural-gas production as a weapon to undercut Russian President Vladimir Putin’s influence over Ukraine and Europe.


The New York Times

Key developments in Ukraine

Provocation charged: Pro-Russian demonstrators demanding greater independence from the central government overcame riot police in the eastern Ukrainian city of Donetsk and poured into the regional administration building Wednesday, retaking it for a second time this week in a tug of war with police. The confrontation came after Sergey Taruta, a billionaire businessman from the region who was recently appointed the new governor, arrived Tuesday. Taruta signaled that police and the local government would resist pro-Russian activists calling for Donetsk to secede from Ukraine. Donetsk is one of several cities in eastern Ukraine where pro-Russian protests erupted Saturday.

Diplomatic front: A U.S. effort to broker the first diplomatic meeting between Russia and Ukraine over the Crimea confrontation failed Wednesday, but Russia’s foreign minister said there would be more discussions. The Russian minister, Sergey Lavrov, spoke at France’s Foreign Ministry in Paris after conferring with U.S. Secretary of State John Kerry, whose effort to arrange a direct meeting between Lavrov and the acting Ukrainian foreign minister, Andrii Deshchytsia — who was in the same building but not the same room — did not happen.

Economic aid: Trying to forge a united response to the crisis in Ukraine, the European Union (EU) is preparing to offer the country up to $15 billion in grants and loans to help shore up its new government and improve its precarious financial position, a leading EU official said Wednesday. The offer from José Manuel Barroso, head of the European Commission, followed the Obama administration’s announcement a day earlier that the U.S. would give $1 billion in energy subsidies to Ukraine. The cash-starved government in Kiev has been struggling to pay its bills, a financial predicament that helped precipitate the current crisis.

Clinton slams Putin: Hillary Rodham Clinton said Wednesday that she was merely comparing the tactics used by Adolf Hitler and Vladimir Putin — and not equating the men — when she drew a parallel between Hitler’s efforts to resettle Germans in the late 1930s to Putin’s recent moves to issue Russian passports to citizens in Ukraine with ties to Russia. “Now if this sounds familiar, it’s what Hitler did back in the ’30s,” Clinton said at a private fundraiser in Long Beach, Calif., on Tuesday, according to The Long Beach Press Telegram. “The Germans by ancestry who were in places like Czechoslovakia and Romania and other places, Hitler kept saying, ‘They’re not being treated right. I must go and protect my people’ — and that’s what’s gotten everybody so nervous.”

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WASHINGTON — The crisis in Crimea is heralding the rise of a new era of U.S. energy diplomacy, as the Obama administration tries to deploy the vast new supply of natural gas in the United States as a weapon to undercut the influence of the Russian president, Vladimir Putin, over Ukraine and Europe.

The crisis has accelerated a State Department initiative to export U.S. natural gas to Europe as a lever against Russia, which supplies 60 percent of Ukraine’s natural gas and has a history of cutting off the supply during conflicts.

This week, Gazprom, Russia’s state-run natural-gas company, said it would no longer provide gas at a discount to Ukraine, a move reminiscent of more serious Russian cutoffs of natural gas to Ukraine and elsewhere in Europe in 2006, 2008 and 2009.

The administration’s strategy is to act as swiftly and aggressively as possible to weaken any moves by Putin in future years.

Although Russia remains the world’s biggest exporter of natural gas, the U.S. recently surpassed it to become the world’s largest natural-gas producer, largely because of breakthroughs in hydraulic fracturing technology, known as fracking.

“We’re engaging from a different position because we’re a much larger energy producer,” said Jason Bordoff, a former senior director for energy and climate change on the White House National Security Council.

The Obama administration’s tactics have attracted unlikely allies, including major oil and gas producers such as Exxon Mobil and Republican leaders on Capitol Hill, who this week urged the administration to speed up natural-gas exports.

Although environmentalists, some Democrats and U.S. manufacturers that depend on the competitive advantage of cheap domestic natural gas oppose the effort, they have fallen to the sidelines.

For Russia, energy supplies are as important to keeping a hold on Ukraine and the other former countries of the Soviet Union as is the Russian army.

Ukraine would freeze without Russian gas, and its flow has been a considerable source of wealth and corruption in both countries.

But Russia is also obligated by contract to provide natural gas to Western Europe, and Moscow remains dependent on Ukrainian pipelines to get it there.

David Dalton, editor of the Economist Intelligence Unit, said: “Russia has always used gas as an instrument of influence. The more you owe Gazprom, the more they think they can turn the screws.”

But this time, there is a major difference.

As recently as 2007, U.S. natural-gas supplies were believed to be dwindling, and the George W. Bush administration was considering importing natural gas from Russia.

Since then, fracking, which environmentalists say could contaminate America’s water supplies, has transformed the strategic landscape.

The U.S. does not export its natural gas. But the Energy Department has begun to issue permits to American companies to export natural gas starting in 2015.

U.S. companies have submitted 21 applications to build port facilities in the United States to export liquefied natural gas by tanker. The agency has approved six applications.

However, even if the Energy Department approves all the pending permits from companies seeking to export natural gas, the fuel could not begin flowing overseas for at least a few years.

Most U.S. natural-gas export terminals are in the early stages of construction. While one, in Sabine Pass, La., is tentatively scheduled to open in late 2015, most others will not start operating until 2017 or later.

At the helm of the new energy diplomacy effort is Carlos Pascual, a former U.S. ambassador to Ukraine, who leads the State Department’s Bureau of Energy Resources.

The 85-person bureau was created in late 2011 by Hillary Rodham Clinton, secretary of state at the time, for the purpose of channeling the domestic-energy boom into a geopolitical tool to advance U.S. interests around the world.

In an interview, Pascual said his team’s efforts had already weakened Putin’s hand and had helped lower Ukraine’s dependence on Russia for natural-gas supplies to 60 percent, down from 90 percent.

House Speaker John Boehner, R-Ohio, on Tuesday urged President Obama to “dramatically expedite” the export-approval process.

“The United States has abundant supplies of natural gas,” Boehner said, “and the U.S. Department of Energy’s excruciatingly slow approval process amounts to a de facto ban on American natural gas exports that Vladimir Putin has happily exploited to finance his geopolitical goals. We should not force our allies to remain dependent on Putin for their energy needs.”



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