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Trump energy policy pits US against Moscow

Last July, US president Donald Trump stood beside his Polish counterpart, Andrzej Duda, in Warsaw and promised to help wean the nation off Russian energy imports.

He offered US fuel as an alternative, "so that you can never be held hostage to a single supplier".

Trump was tapping into longstanding European concerns about Russia's ability to shut off natural gas supplies - which it has done in past pricing disputes.

US lawmakers say Russia's influence over energy has proven effective in silencing critics of its human rights abuses, annexation of Crimea, and incursion into eastern Ukraine, an assertion the Kremlin has denied.

Six months after Trump's trip, Poland has contracted for imports of US liquefied natural gas (LNG), crude oil, and coal, and announced it will not renew a gas supply deal with Russia's state-owned Gazprom when it expires in 2022 - halting an exclusive and troubled relationship dating to 1944.

The episode exemplifies a key goal of Trump's "energy dominance" agenda - using rising energy exports to bolster Washington's geopolitical influence.

The policy also seeks to boost domestic production through rollbacks of environmental regulations and expanded energy leasing in federal territories, but those efforts have so far had little impact.

Trump nonetheless inherited a booming oil and gas industry that has given his administration more international clout in energy markets than any White House has enjoyed in decades.

US oil output has risen to more than 10 million barrels per day for the first time since 1970 thanks to improved drilling technology that dates back years. Natural gas output has also soared, making America the world's top producer of the fuel.

Meanwhile, the 2015 repeal of a 40-year-old ban on crude oil exports - passed by a Republican-controlled Congress and signed by then president Barack Obama - has made strategic shipments overseas possible. The permitting of US LNG export facilities in recent years has provided another boost.

It remains to be seen how successfully the administration will play its strong hand.

Obstacles include environmental opposition to new pipelines and other energy projects at home, competition from other big exporters abroad, and potential trade disputes.

But early signs are promising.

Lithuania, Ukraine, China, Japan, South Korea and Vietnam are among the more than 30 countries that have recently cut US energy supply deals over the past two years - many for the first time.

John McCarrick, the deputy assistant secretary at the State Department's Bureau of Energy Resources, said his staff helped pave the way for some of the energy supply agreements by meeting with private and public officials in Europe and Asia to promote the strategic value of US energy.

"All we're trying to do is level the market playing field," by giving allies the ability to diversify their energy supply, he said.

Doing so, he said, could reduce the influence of "market distorting actors," including Russia and producers in the Organisation of the Petroleum Exporting Countries (OPEC).

The administration also hopes to use energy exports to reduce yawning trade deficits with partners - particularly with China, which last year exported goods to the United States worth $US347 billion more than it imported.

China has become a top customer of US LNG and is now the second-largest buyer of US crude behind Canada.

China's state oil company signed a preliminary agreement in November to invest in a $US43 billion LNG export facility in Alaska, which would compete with Russia's Yamal LNG export terminal in the Arctic.

"To see collaboration rather than being at each other's throats - that's a real positive," said Daniel Yergin, an energy historian and vice chairman of IHS Markit.

US coal exports to Asia have also risen in recent months as ailing US mining companies search for alternatives to the weak domestic market.

While US exports are soaring, its imports are falling - reducing its economic and political dependence on oil-producing nations in the Middle East and elsewhere.

Since 2005, US net petroleum imports have plunged to just 4 million barrels per day, from 12.5 million bpd, with the share coming from OPEC falling to about a third from more than half.

The now-repealed US oil export ban dated back to an era of feared fuel shortages after Arab members of OPEC imposed an embargo against the United States in retaliation for US support of the Israeli military.

Trump's National Security Strategy document, unveiled in December, said one aim of the "energy dominance" policy was to "help our allies and partners become more resilient against those that use energy to coerce".

Former Soviet bloc nation Lithuania received its first cargo of US LNG in August - an event Lithuania's foreign affairs minister called "crucially important for the whole region".

Austrlaian Associated PressBack to Breaking News

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