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US using gas to promote markets, environmental goals overseas, diplomat says

The U.S. Department of State is working to spread the use ofnatural gas around the world, calling the fuel "critical to economicgrowth" and democracy.

The department is working with national governments to put"the right investment climate in place," Robin Dunnigan, deputyassistant secretary of state for energy diplomacy, told a largely gas industrycrowd in Washington, D.C. on Oct. 3. Such a climate would allow countries thatare trying to increase gas-fired electric power generation to attract moreforeign investors to help build the required gas and power infrastructure.

Observing that China will need gas as it turns away fromcoal as a fuel, Dunnigan said, "Gas is going to be absolutely critical toeconomic growth and related environmental goals."

This effort goes hand in hand with LNG exports. The U.S.Energy Information Administration has projected that the country will become anet gas exporter by 2018 and said LNG exports could reach 6.7 Tcf in 2040.Significant LNG exports from the Lower 48 began earlier in 2016 with from 's Sabine Passterminal in Louisiana.

"The most important impact of our LNG exports is we arehelping to contribute to more market-based pricing mechanisms around the worldand a more fluid, flexible market," Dunnigan said. "Not everycontract now has to be a 20-year take-or-pay fixed contract. There is moreflexibility. That is in part … a result of the amount of gas that we areputting on the market, and that is allowing them to look more to gas as asolution to their energy challenges."

Lithuania, for example, was able to renegotiate a gas supplycontract with OAOGazprom that was 20% lower in price a month after the countryopened its LNG import facility, Dunnigan said. "We are working with ourEuropean partners to do more of that," she said.

Dunnigan said her department has worked with Europe onbuilding a gas pipeline network that could improve transportation of thecommodity across the region. In combination with new LNG import terminals, sucha pipeline could reduce dependence on gas supplies from Russia, which now hassome countries wholly dependent on its gas. "Andthat's in 2016," Dunnigan said. "It's just not a very energy-secureplace to be 100% dependent on one supplier."

Dunnigan made her remarks during a panel at Energy DialoguesLLC's North American Gas Forum. A career official with the Department of State,she began her talk with an anecdote. Hillary Clinton, who became secretary ofstate in 2009, took her first trip to Europe after Russia cut off gas flows toUkraine. The Russian move prompted Ukraine to hold onto the gas it had. Peoplein Bulgaria were forced to burn wood to stay warm, and this ended up a topic ofconversation between Clinton and European officials.

"It did affect and inform her thoughts about theinterconnection between energy and foreign policy," Dunnigan said."And it was something that influenced her when she created the Bureau ofEnergy Resources in the State Department a couple years later."

The bureau has existed for five years. It examines howenergy affects the national security of U.S. allies and through them thesecurity of the U.S. "Certainly it affects economic growth [and] politicalstability, and energy impacts our ability to meet our climate changegoals," Dunnigan said.