Oil Report

CORRECTED-INTERVIEW-Russia 'fearful' of America's rising energy exports -U.S. envoy

(Corrects to say NuScale Power’s major investor is Fluor Corp, company is not a joint venture of Lightbridge and Framatome in 12th paragraph)

WASHINGTON, June 7 (Reuters) - Russia has criticized U.S. efforts to supply natural gas to Europe because it is “fearful” of free market competition, Washington’s top energy diplomat said this week, in comments that reflect growing tensions with Moscow over President Donald Trump’s “energy dominance” policy.

The United States has become the world’s fastest growing exporter of liquefied natural gas (LNG) and is set to become the world’s third largest shipper of the product this year, due to surging output from U.S. shale fields. Trump has said the supplies should provide European allies with an alternative to Russian energy and his Energy Secretary Rick Perry has called the exports “freedom gas,” postures that have drawn criticism from Russian officials.

“They don’t like the idea of, even the concept of, competition because it forces a change in their behavior,” Frank Fannon, U.S. assistant secretary of state for energy resources, told Reuters in an interview late on Thursday, saying it had forced Russia’s state-controlled industry to adjust pricing. “They prefer to operate under opaque conditions in the dark of night, they’re fearful of the energy that the U.S. is producing and the exports,” he said.

In the most recent example of Russian criticism over U.S. energy shipments, Igor Sechin, the CEO of Russian state energy giant Rosneft and one of President Vladimir Putin’s closest allies, accused the United States on Thursday of ushering in an “era of energy colonialism”, and accusing it of using energy as a political weapon.

U.S. officials have often levied similar charges at Russia, which has at times shut off gas supplies to Ukraine in the dead of winter during pricing disputes.

Sechin said Washington’s efforts to push American gas into Europe came alongside threats by U.S. lawmakers to impose sanctions on Russia, including on its Nord Stream 2 pipeline led by Gazprom. The Trump administration has opposed the pipeline, as did the Obama administration, saying it would increase Russia’s economic grip on Europe and deprive Ukraine of transit fees.

“Oppression of competitors has become the dominant theme of U.S. economic and foreign policy,” Sechin said at a forum in St. Petersburg.

Fannon rejected Sechin’s comments, saying the Trump administration is pushing for transparent, free markets.

“What we’re at work on here is open, transparent, efficient market development and design,” said Fannon, who formerly worked at BHP Group, a global mining and energy company, and Murphy Oil. “We’re confident that if that happens then, yes, U.S. companies should fare very well.”

Trump has slashed regulations on drillers to help boost exports of oil and gas to allies and partners, a policy he calls energy dominance.

Russia is also apprehensive about projects Washington has supported for 10 years to bring natural gas via pipelines from Azerbaijan’s Shah Deniz field to markets in Europe via the Southern Gas Corridor, Fannon said. The last leg of the $40 billion corridor, the Trans-Adriatic Pipeline (TAP), is on track to start next year.

In addition, Fannon said Russia fears U.S. development of advanced nuclear power known as small modular reactors, a technology he said could be commercial in less than 10 years. The reactors are being developed by NuScale Power, a company whose major investor is Fluor Corp.

Surging U.S. energy supplies have helped Washington advance other geopolitical objectives without spiking global oil prices. Trump pulled Washington out of the 2005 Iran nuclear deal last year and snapped back sanctions on its oil exports. Washington sanctions on Venezuela’s state oil company PDVSA are part of an effort to oust President Nicolas Maduro, whose country is suffering an economic collapse and political crisis.

Fannon said the administration is working through diplomatic and intelligence channels to curb any smuggling of oil by Iran, building on its experience of limiting North Korea’s coal shipments that violated sanctions on that country. “We’re not starting from scratch here,” he said. (Reporting by Timothy Gardner; editing by Richard Valdmanis and Diane Craft)