Assistant Secretary Geoffrey Pyatt LNG Allies Event

A/S Pyatt:  — It’s great to have DOE Assistant Secretary Brad Crabtree as a partner here in Washington, DC.

I actually want to start the event because I’m just back from Trinidad & Tobago and Guyana; and I apologize to Marla who had to hear this from the speech yesterday, but I was really struck on the two visits by the consensus that I found.  Two important fossil fuel producer countries who also are deeply concerned about and focused on the transition issues as Assistant Secretary Crabtree talked about around managing the carbon impact of those assets.  Around the transformations that are happening across the global energy system in terms of the greening of shipping, in terms of the growth in hydrogen, in terms of carbon sequestration and what that means especially in smaller economies like in the Caribbean.  And then also understanding the critical role that countries like T&T and Guyana play in the global energy system that has been severely disrupted by Vladimir Putin.

It was especially interesting for me to be in Guyana.  I was one of the most senior Biden Administration officials to make that trip.  Brad, they really look forward to having you down there, and I came back and have been saying to everybody, you have to understand what’s happening there.  A small country with 11 billion barrels of oil and equivalent proven reserves.  A central role for America’s companies.  This really is a USA story with ExxonMobil and its service companies really defining the investment story in that country, and a tremendous opportunity to help a country that is already net zero because of its huge forest reserves to make the right choices as they continue to develop their assets in order to deliver growth in a country that is still the second poorest of the Americas.

It’s a really interesting test also of our great power competition policy.  It’s in a country where China built a new airport, China built the building that the parliament meets in, and conveniently [CNOC] building right across the street from ExxonMobil.  So it’s a real reminder of the important role that American companies play and the critical role that these energy issues play especially in the developing world where the challenge is, as Brad likes to say, not just about energy transition but in many cases the transition from not having energy to having energy.

This also goes to something that my boss, Secretary Blinken, says all the time which is that we’re about 15 percent of the global CO2.  So even if the United States decarbonized tomorrow, it’s not going to solve the climate crisis.  So the partnerships that we build that the State Department and DOE are working on every day are really critically important.

And of course as on so many issues, there is no partnership that is stronger and more robust than our Transatlantic partnership and the work that we do with the European Union.

In that regard I was really pleased to be part of the delegation led by Secretary Blinken and Deputy Secretary of Energy Turk for the US-EU Energy Council last month.  This was the 10th meeting of the US-EU Energy Council, but it was the first one since the invasion of Ukraine.  It really struck [ me], and Ambassador Lambrinidis touched on a couple of aspects of it, but let me just highlight what jumped out at me.

First of all, literally the first message and the concluding message from our European colleagues was hurray for American LNG producers.  I want to say, Ambassador Lambrinidis, I think for our delegation it was really heartening to hear the recognition and the appreciation of the role that American producers played in helping to defeat Vladimir Putin’s weaponization of oil and gas resources.

I think the other point that’s really important for everybody in this room to understand is that as Ambassador Lambrinidis said, there is no going back.  Russia is never again going to be viewed as a reliable energy producer.

We’ve talked a lot — I talked a lot as Ambassador to Ukraine and Ambassador to Greece — about the risks of European dependence on Russian oil and gas.

But what we didn’t talk enough about is Russian dependence on European consumers.  I think because of enormous geopolitical impacts, because Russia has spent decades building out an infrastructure to supply a European market that has gone away.  That is going to have an enormous impact on the future trajectory of the Russian economy, on the Kremlin’s ability to continue exercising maligned influence around the world, and we can see that if you watch the implementation of the crude oil price cap which has been succeeded beyond all expectations as I think the New York Times highlighted this morning.  This is going to ripple for years and years to come in terms of how the Kremlin is able to behave.

A second point that leapt out at me was — and Ambassador Lambrinidis talked about the shock that Europe went through, especially in the first half of 2023 with the rising prices.  I was living in the EU at that point so I saw the real fear in the eyes of politicians, my counterparts in the Greek government, consumers who were seeing their utility prices going up, industrialists who were working about the future competitiveness of their companies.  It was a truly existential challenge that continued up until this fall when we had the US-EU Task Force meeting here at Ambassador Lambrinidis mission I think in October.  There is a huge sense of relief that that period of crisis has passed.

Europe has finished the winter with the largest gas reserves it has ever enjoyed.  And in fact I was looking at the latest numbers yesterday.  I think I saw Spanish storage is at 95 percent or something thereabouts.  And I think there has been a great sense of relief about the progress that has been made there.

I think it’s also important for everybody here in the States and especially in Washington to appreciate the speed of European decoupling from Russian energy sources.  I don’t think anybody would have predicted in February of 2022 that Germany would have gone to consuming zero Russian gas crude and coal, and across the board the numbers that Ambassador Lambrinidis alluded to with Russian piped gas having gone from about 40 percent overall European consumption to around 9 percent.

There is still, as Stavros said, about 122 BCM holes in European energy supply.  Some of that will be filled through an acceleration of the energy transition.  A lot of that is going to be filled by American and other LNG.

So the partnership that we’re talking about here this morning is really critical to the overall transatlantic relationship.

It was also really striking to me when I was Brussels that in so many ways Russia has ceased to become the defining factor in energy conversations in Europe.  Russia is the major geopolitical reality for most European allies.  But the European conversation in the energy security area has moved on and a lot of that focuses on the issues that Assistant Secretary Crabtree and Ambassador Lambrinidis talked about.

We had a good discussion in the energy council about the Inflation Reduction Act.  Lots and lots of European interest in where we are going on green hydrogen, what is happening in the United States on carbon sequestration and the efforts that Assistant Secretary Crabtree talked about on reducing the climate methane and CO2 impact of our fossil resources.

In this regard, Marla and I talked about this.  I had this conversation yesterday also with Matt Kessler, the senior Climate Scientist at ExxonMobil.  I think we as the United States and American companies need to do a better job of educating customers and governments in Europe about what’s happening in the United States on this carbon intensity story.  We need to explain the investments that our companies are making in methane abatement, the transformation that is happening in terms of how our industry works here in the United States and the investments that are being made to ensure that our fossil resources are developed in the least climate-damaging way possible.  This is really what Brad’s effort and all the work around MRV is about.

But I think that certainly from my conversations with colleagues, with senior politicians in Europe, it’s still not sufficiently understood and not surprisingly, this is part of the Russian narrative.

Having spent time in the former Soviet Union, it still makes me laugh a little bit when I hear Russians talk about how clean their fossil fuel production is compared to American producers’.  But it’s a fact and we need to educate folks on that.

We also talked to the Energy Council about the rest of the world because we have to remember that for all of the necessary focus that has gone to the transatlantic energy relationship, Russian’s weaponization of its oil and gas has had a global impact.  I say that having traveled to Pakistan, to India, spent a lot of time talking with colleagues in Africa and elsewhere, and you see how the developing world has really been it hard by the spike in energy prices, what that has done to commodity prices, to the cost of fertilizer.

We all have to recognize that what Russia has done has had a global impact and one of the things that keeps me up at night in my role in helping to advance America’s global energy diplomacy and especially our energy transition is the risk that we have a scenario where the energy transition is speeding ahead among the G7 and the developing world but leaves behind many of the developing countries who don’t have the capital resource necessary to make the investments in storage, in renewables and in decarbonization.

So that was necessarily an important part of our conversation as well.

I won’t spend much time on MRV and the related issues that Brad talked about other than to note that this was a significant focus of the discussion in Brussels as well, including our joint partnership on issues that Ambassador Lambrinidis alluded to around, for instance, Algeria, Egypt.  I actually just got a letter yesterday from Ditte Juul-Jøergensen one of my Brussels counterparts, on the work that we’ve respectively been doing with Algeria. Both of us met with the Algerian Energy Minister as did Brad when we were at CERAWeek and we’re working very hard on that target.

A priority for the State Department over the past couple of months has been Central Asia, both Turkmenistan and Kazakhstan, and I think you’ll see considerable continuing discussions with those governments as we head towards COP28 about bringing them into the Global Methane Pledge, and then making the investments necessary to help reduce leakage and venting and flaring within their fossil infrastructures.  Recognizing these are basically low hanging fruits.

Algeria’s particularly an acute example because it’s a country that wastes so much with the existing pipeline infrastructure to deliver that gas to Europe, if there was an investment made to capture that resource.

The last issue I want to conclude on.  I think for the United States, and I’m now about eight months into this job.  One of the things that struck me as I travel around the world and try to help articulate our policy on the geopolitics of energy is that was the United States, as the U.S. national security community are still really processing what it means for the United States to be the largest LNG exporter in the world.  We’re going to have that status for years and years to come, and we’re thinking about how to leverage that power for good, how we need to reinforce our alliance relationships, support our friends and allies, also what it means for our communities.

Next week I’m going to be traveling to Alaska, a promise I made to Senator Sullivan when I was getting confirmed for this job, in part to talk to communities, to understand what’s happening there, but also with a strong focus on Asia.

I was glad in this role we launched a US-Japan Energy Security Dialogue.  I was actually kind of shocked that we didn’t have that venue with Japan when I came into this role.  Obviously the core of our Transpacific alliance relationships.

We also had very good energy security dialogues, Brad joined me with our Australian allies about two weeks ago.  We had a Korean dialogue that took me to Seoul earlier this spring.  In all of these cases we see how for all of those Asian allies, and I particular conversations that I had with the Thais, which is another Asian dialogue we just concluded with Thailand, with Japan, with Korea.  Our energy relationship is absolutely central to the overall bilateral relationship.

And we need to work together to figure out how to build the predictability that you as investors and producers require to conduct business.  How to advance our shared goals in terms of energy transition and the climate crisis and how we work together, as I said, to ensure the least damaging climate impact of the fossil resources that the world’s going to need.

And finally, how we work together in the developing countries.  As I said earlier in the story, the world is going to need all the energy that it can find in the years ahead.

If you look at the growth trends, I’ve spent a lot of my career in and on India — that’s where I get a lot of my gray hair.  When you look at the energy demands that the IEA has charted out for India looking two years ahead.  Prime Minister Modi will personally be here in a couple of weeks, has set some fabulously ambitious targets for removal and energy production.  But even if he meets those targets that’s going to be insufficient to satisfy the energy demand growth that is going to occur because the economy is growing at 7 percent a year and they’re adding hundreds of millions of people to their middle class.

So the partnership between the State Department and DOE is more important today than I think it’s ever been, but also the partnership that we have with the producer community is absolutely essential.

As High Representative Borrell and Commissioner Simson said when we were all together in Brussels, this is really a central aspect of the larger geopolitical dimensions of our alliance relationship and our commitment to support the shared values that our governments represent.

So thank you very much for having me with you.  Again, Fred, thank you for putting me up with such a wonderful panel.