Local tries to reduce dependence on Russian energy

In 2015, Dale Perry of Bainbridge Island started his company Energy Resources of Ukraine to supply liquefied natural gas to Ukraine to reduce its dependence on Russian energy.

In recent weeks, the United States and the European Union have reached an agreement to increase the supply of liquefied natural gas to European countries in order to reduce Europe’s dependence on Russian LNG. In a joint press conference with European Commission President Ursula von der Leyen, President Biden said: “We are coming together to reduce Europe’s dependence on Russian energy” .

Perry does not see the US-EU agreement as a trade agreement, but as an ethical agreement. As an LNG supplier in Europe, Perry believes: “We have to find a way to stop buying gas from Russia. Because right now, every day, millions of dollars are being paid for natural gas to Europe, to Russia, to buy weapons to kill Ukrainians.

For 35 years, Perry has worked in the international energy industry in Kazakhstan, Ukraine, Africa, Asia, South America, Central Europe and North America. Since the Dignity Revolution in 2014, when companies realized they could start businesses without paying bribes, he has transformed Ukraine’s energy sector.

Known recently for his efforts to send humanitarian aid to refugees in Ukraine, Perry has also fought corruption by trying to remove Russian President Vladimir Putin’s energy grip on Europe. “The gas sector is the most corrupt industry in the world. Because (the energy market) is so fluid and the turnover of money is at such a high rate,” Perry said.

A silver lining

As the war rages on, Perry sees a very thin ray of hope for Ukraine. He believes that if corruption can be driven out of the country, it can be rebuilt in a Western model with real democracy and real competition in all sectors. He said nearby: “Poland has no corruption, and the Ukrainian people are learning that now. There is a very close affinity between Poles and Ukrainians, especially Western Ukrainians. They really see themselves as sort of one of the same people.

While Ukraine has far more natural resources, the democratic political process has led to Poland’s economic success. “The Catholic Church has always been very strong, even in communist times, and it still had small businesses. So a welder could work for himself and a baker could work for himself. It is the big companies that have been collectivized. Whereas in Russia everything belonged to the state,” Perry said.

The expansion of democracy in Eastern Europe threatens Putin’s Russia, he said. “His real fight has been around his regime’s self-preservation,” Perry said. “He (Putin) is afraid of what will happen if Ukraine enters the European Union. Then Ukraine would look like Poland. When the (Berlin) Wall came down in 1989, Poland’s economy was one-fifth the size of Ukraine, and 30 years later it’s the exact opposite.

“It’s a bigger story for all of Europe,” Perry said as nations strive to reduce their reliance on Russian gas.

Perry’s company

EU countries buy 15 billion cubic meters of LNG every year, or 150 Russian ships. Of the 15 billion cubic meters of LNG purchased by ERU over the past five years, only 500 million cubic meters, or five vessels, were purchased from the United States.

The blockage is that everyone will try to buy U.S. LNG from a few suppliers on the Gulf Coast, Perry said, adding that it was a big sleight of hand. He said moving LNG around the world while working with European leaders to end their dependence on Russian energy will have a huge impact on supply and demand.

Perry recently met with the Prime Minister of Moldova, whose country receives 100% of its natural gas from Russia. “In October last year, we provided Moldova for a day, to prove that they have options. We are in talks with the US government to put together a complex agreement, as we did in 2017 in Ukraine, to supply American LNG to Moldova in a few weeks.

The gas pipeline from Russia will continue, because Europe does not yet have an answer to this. One could be to supply more LNG from the United States and Qatar. The facilities under construction in the United States and Canada should be commissioned in 2025. That of the United States will be able to deliver 21 billion cubic meters of LNG per year, that of Canada 19 billion m3. These projects were planned to meet growing Asian demand.

Perry sees this agreement affecting LNG prices in the United States. It will eventually see higher propane prices in places like Bainbridge Island, but Russia will have to sell its gas elsewhere.

“In my mind, the winners are China and India,” Perry said, “Russia will become subordinate to Asian shareholders/investors.” Because China and India are not participating in the sanctions, Perry expects Russian LNG sold to Europe to move to Asia. Then, the American LNG initially destined for Asian markets will be diverted to Europe.

Overall, the construction of new facilities in the Gulf of Mexico, along with continued development and production of natural gas, is good for the US market.

“With the increase in liquefaction plants…natural gas prices in the United States will be more closely tied to international prices. This will mean more volatility and ultimately higher prices for domestic consumers. A Bainbridge resident will see this in some PSE (Puget Sound Energy) rate adjustments and to the extent that propane is tied to overall energy prices, propane will also rise.

Fortunately, Perry said, changes in natural gas demand shouldn’t impact at the gas pump.

Vessel carrying LNG purchased by the ERU arriving in Poland from Texas, February 25, 2022. Photo courtesy PGNiG

Lynn A. Saleh