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POLITICS: PennAve

Russia-Ukraine natural gas fight comes to Capitol Hill

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Russian energy giant Gazprom's decision to cut off natural gas supplies to Ukraine is expected to amplify talks about natural gas exports scheduled to begin this week on Capitol Hill.

The move by the state-owned company comes as Congress' natural gas export discussions, which had recently cooled off following an initial frenzy when Russia annexed Ukraine's Crimea region in March, are heating up in the House and the Senate. The upper chamber's Energy and Natural Resources Committee is holding a hearing Thursday, while the House plans to vote on a bill to expedite exports next week, aides confirmed Monday to the Washington Examiner.

The recent tension between Russia -- which has used its dominance of Central and Eastern European gas markets as a political weapon -- and Ukraine will change the flavor of the Senate hearing. It also will heighten focus on the Colorado Senate race, a key midterm battle for Senate control predicated on identical natural gas export bills.

Chairwoman Mary Landrieu, D-La., originally scheduled the hearing to comment on a proposed change by the Energy Department in how it processes applications for export to nations that lack a free-trade agreement with the United States.

But she is facing calls from lawmakers, including Democratic colleague Sen. Mark Udall of Colorado, to bring up natural gas export legislation.

"Sen. Udall and his team are continuing to talk with both leadership and the [energy] committee" about moving the bill, Mike Saccone, a Udall spokesman, said in an email.

Udall's bill, which mirrors GOP Senate challenger Rep. Cory Gardner's measure, was introduced in late April at the height of Washington discussions on the national security and geopolitical implications of exporting natural gas.

That discussion will again rear its head.

Gazprom said Monday that it would end deliveries to Ukraine unless it gets $1.95 billion in back pay from the country, which has said it won't honor its debt until Gazprom adjusts its rates to market prices. That has raised concerns about supply disruptions to the rest of Europe, as Gazprom's gas flows through Ukraine's pipelines.

Gardner's bill is expected to come to the House floor next week, congressional aides said, and is expected to pass with bipartisan support. The bills would require the Energy Department to rule on exports to non-free trade nations within 90 days, addressing concerns from GOP and Democratic lawmakers that the department is moving too slowly.

The Energy Department last month proposed shifting its decision on the exports to follow developers receiving approval from the Federal Energy Regulatory Commission, which the DOE suggested that would speed approvals. Natural gas exports must be deemed in the public interest and therefore require more scrutiny -- the DOE has conditionally approved seven so far, and 25 are pending.

The Energy proposal garnered largely mixed responses, though House Republicans slammed the move as a delay tactic and the industry said it could create more confusion.

The Energy proposal is undergoing a 45-day public comment period. Senators will have their chance to weigh in during the Thursday energy committee hearing, though there are some questions about whether the proposal would conflict with the Udall and Gardner bills.

"One thing we have heard is that DOE's new [free-trade agreement] process has created some question about the specific language in these bills. Industry is working on that -- both on trying to figure out what the new rules mean and how it would interact with the [liquefied natural gas] bills," Matt Letourneau, a spokesman with the U.S. Chamber of Commerce's Institute for 21st Century Energy, said in an email.

The congressional focus is likely to remain in the upper chamber, as House passage of Gardner's bill appears imminent. The bill, which secured Democratic committee support, is a scaled-back version of the original, which mimicked a Udall measure.

Expanding natural gas exports has support from Republicans and Democrats who say it would buoy allies and benefit the economy through increased revenue and jobs. Some Democrats, however, are concerned a rapid boost would spike domestic natural gas prices and dent the competitiveness of some energy-intensive manufacturers.

Republicans on the House Energy and Commerce Committee on Monday evening touted the bill's importance to ending Russia's stranglehold on European natural gas.

"For decades, Russia has been wielding its energy resources as a weapon to exert power over our allies, but the U.S. now has the opportunity to fight back against this Russian aggression with our own emerging energy prowess," they wrote.

Many questions remain about how Landrieu will proceed in the Senate, as congressional aides and industry sources are unsure of what Landrieu, a supporter of expanding exports, is planning. One thing that is certain is that lawmakers will continue to push the issue.

Sen. John Hoeven, R-N.D., for example, is thinking about entering the fray with a bill, a GOP aide said. But an industry source said that Hoeven's search for Democratic co-sponsors has proved fruitless, which the source said is keeping it shelved.

"If anything is going to leave the committee, it's going to have to have a Democratic original sponsor," the source said, noting the short legislative window between now and November's midterm elections.

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Zack Colman

Staff Writer
The Washington Examiner