Transatlantic Energy & Trade Relations

1. Transatlantic Energy & Trade Relations

2. Transatlantic Energy & Trade Relations • U.S.-EU Energy Council • Promoting Energy Diversification in Europe & Eurasia • Shale Revolution and its Impact on Energy Markets • De-Mystifying Impact of Free Trade Agreements (FTA) and Liquefied Natural Gas (LNG) Licensing • Trade Implications of Impending EU Fuel Quality Directive (FQD)

3. U.S.-EU Energy Council 1. Energy security and markets2. Energy policies and regulations3. Energy technologies and research cooperation

4. Energy Diversification • A key component of our energy policy in EUR and elsewhere is diversification - in energy routes, sources, technologies, and consumer bases. • We support EU efforts to create a common energy market that extends to Ukraine and beyond through the European Energy Community.

5. U.S. Natural Gas Supply by Source History Projections 2011 Dry gas production billion cubic meters (bcm) Source: EIA, AE0 2013

6. Global Gas Markets World LNG Estimated April 2013 Landed Prices ($US/mmbtu) UK $10.00 Belgium $9.67 Lake Charles $3.22 Japan and South Korea $16.80 Spain $14.40 China $16.40 Henry Hub $3.97 India $15.80 Rio de Janeiro $16.08 Bahia Blanca $16.58 Source: IEA, FERC, media and industry estimates.

7. DOE LNG License Approvals

8. Europe Gas Trade 2011-2017 Total European Demand (2011) – 500 bcm/y Estimated European Demand (2017) – 561 bcm/y LNG Imports (2011) – 68 bcm/y LNG Imports (2017) – 74 bcm/y Pipeline Imports – 199 bcm/y Pipeline Imports (2017) - 236 bcm/y Trinidad & Tobago Nigeria Current Pipelines Future Pipelines Current LNG Terminals Future LNG Terminals Current LNG Imports Future LNG Imports

9. World Energy Consumption Forecast Source: U.S. Energy Information Administration, 2011 International Energy Outlook

10. FTA = LNG Exports • The Natural Gas Act directs the Department of Energy to grant export authorizations unless the Department finds that the proposed exports “will not be consistent with the public interest.” • Under federal law, exports application to countries with which the United States has an FTA, provided that FTA grants national treatment for trade in natural gas, are deemed to be in the national interest, thus allowing for an expedited application and approval process. • Remember: ultimate decisions about where U.S. companies will seek to export LNG will be based on commercial decisions based on the economics of the global energy market.

11. EU Fuel Quality Directive • The EU is amending its Fuel Quality Directive (FQD) with the aim of reducing Europe’s greenhouse gas emissions from road transport by 6% before 2020. • The most likely methodology would assume high carbon content for any fuel derived from Canadian or Venezuelan crude oil. • The U.S. exports about $13 billion in diesel fuel products to the EU per year and some or all of these exports would be affected.

12. FQD: Expected Next Steps • The EU’s Directorate-General for Climate Action (DG Clima) is reviewing six potential options and is expected to shortly select an option (or combination of options) as its recommendation. • The recommended option would then be sent forward for a three-week Commission inter-service consultation and then submitted to the Environment Council for consideration/vote. • If the proposal passes the Environment Council, it moves to Parliament, which can only veto the proposal with an absolute majority.

13. EUR and ENR Contacts • Dale Eppler, Energy/EST Counselor, U.S. Mission to the EU (Brussels) • Susan Vesel, Climate and Science Officer, U.S. Mission to the EU (Brussels) • Daleya Uddin, Energy/ESTH Officer, European Union Office (EUR/ERA) • Thomas Cunningham – Energy Diplomacy Officer for Europe (ENR/EDP/EWA)