HomeBureau of Energy ResourcesRemarks & Releases...Assistant Secretary Pyatt’s Interview with Anna Klishina for The Bell

# 											Assistant Secretary Pyatt’s Interview with Anna Klishina for The Bell									

Interview

Geoffrey R. Pyatt, Assistant SecretaryBureau of Energy Resources

April 12, 2024

**Question:**

Let’s talk about Ukraine, first of all. Russian attacks have damaged a huge amount of Ukrainian infrastructure.  There are different estimations, even up to 70%.  How do you estimate this damage?  How severe is it in your view, and which help will you and the Western Allies provide Ukraine?

**A/S Pyatt:**

Through two winters now, Vladimir Putin has tried to weaponize the winter against the people of Ukraine.  These attacks on energy infrastructure began in October of 2022.  Soon after that, I was asked by the White House to lead a process across the U.S. government but also with our G7 allies to ensure that Ukraine had the support it needed to achieve victory in that front of the war as well.  

Ukraine has been amazingly successful, thanks largely to the courage of Ukrainian energy workers from [inaudible].  Despite wave after wave of attacks by Kinzhals and with the shahed drones, Putin has failed in his objective of bringing down the Ukrainian energy grid.  I think when I talk to European energy authorities, everybody thinks it’s a miracle that the Ukrainian system has been as resilient as it has been.  

The Kremlin and Putin have been incredibly irresponsible in these attacks, including attacks against nuclear infrastructure and the occupation of Zaporizhya, the largest nuclear station in Europe.  Rafael Grossi, the IAEA Director General, has pointed out this is unprecedented, using a nuclear object as part of a military strategy.  

Ukraine has been extremely resilient in restoring their system in the face of Russia’s attacks.  The United States alone has provided about a billion dollars of energy sector equipment for replacement of auto transformers, circuit breakers, grid equipment, generators, emergency heating to avert humanitarian disasters, all of which, consistent with every other aspect of this war, Putin thought that Kyiv was going to fall in two weeks.  He’s completely failed in this effort.  

I think as somebody who spends a lot of time, the past decade, thinking about and working on different aspects of Russia’s invasion of Ukraine, one of the great tragedies aside from the tragedy that this represents for Russian citizens, younger people like yourself, is also the incredible act of self-harm.  I think historians will look at this period and see what Russia has done to itself. 

Russia, previously the world’s largest oil and gas exporter, has now lost its European market forever, and it’s never going to come back.  NATO, larger than it was in 2022, and more resolved than it has ever been to strengthen the alliance, to make the investments necessary for defense.  Ukrainian people.  I mean, I, I always used to say, when I was ambassador in Kyiv, that I just wish that some of the leadership in Moscow would spend some time walking around the streets of Kyiv.  And understanding what Ukrainians were looking for, which was not a war with Russia or confrontation with Russia, but they wanted to control their own futures.  

I’ll always remember, I traveled a lot in eastern Ukraine.  I spent time in Mariupol, I spent time in Zaporizhya, I spent time in Dnipro.  I spent a lot of time in Kharkiv.  I’ve been to all the cities that have seen the worst Russian massacres... [inaudible], Bucha, Irpin.  I know these towns.  I know the streets. 

I will always remember a visit to Kharkiv.  I went to Turboatom, which was one of the largest metallurgical factories in all of the former Soviet Union. It’s where the Soviet Union made a lot of their nuclear enclosures, the big steel pieces, giant factory, manufacturing halls that are hundreds of meters long and a very Soviet system.  You walk in and you see the sign for the Turboatom ice hockey team and the Turboatom kindergarten and the Turboatom traditional dance club.  But also, because I was there in 2015, you saw the pictures of all the martyrs for Turboatom.  And I remember talking to an older woman who worked on the factory floor.  Very traditional, Russian-speaking eastern Ukrainian.  She said to me, and it was really interesting, as we were talking, she said, I don’t understand how this has happened.  Don’t they understand – and she talked about the friends and relatives that she had in Belgorod and elsewhere in Russia – and how we used to go back and forth and we used to have everything normal, you know, everything used to be normal. And that’s why this has been so painful.

To go back to your question.  Ukraine is going to survive.  There’s absolutely no question.  Ukraine is today a sovereign, democratic, European country with its capital in Kyiv.  And nothing Vladimir Putin is ever going to do is going to change that.  He may be able to bite off another chunk here or there.  And I just I can’t imagine what it’s like, you know, for the widows and the families of the Russian soldiers who have died in Bakhmut and Avdiivka.  And you know I’ve driven in that region.  These are tiny, little poor towns.  Is this worth all the sacrifice that the Russian people are making for this?

So, you know, I think we are going to do what it takes.  That was the clear message yesterday from the Three Seas Summit.  It was very powerful to have President Zelenskyy there.  I had pictures, because my network in Kyiv was sending me even before they were on social media, the photographs from [inaudible], from the central heating plant in Kharkiv.  And I was showing this to some of the presidents and the prime ministers who were there yesterday, and they all had the same reaction, which is – we have to do more. 

We have to help Ukraine, because this is an attack on the fundamental values that Europe represents.  And I, you know, again, back to my point about how I wish more Russian leaders could walk on the streets of Kyiv, because I remember during the Maidan, I would go down there sometimes.  And just talked to people, you know, why are you here?  What do you want?  And nobody said, well, we want to be in NATO, or we want to have a confrontation in Russia.  They all used the same word – normal – we want to live in a normal country, because Yanukovych, supported by Vladimir Putin, had built a government that was corrupt, it was undemocratic, it was silencing journalists, that manipulated the press.  And the Europeans who were out there on the Maidan, and the Europeans and the Ukrainians who have built a European democracy and the Rada.  They want to live in a normal European country.  And when they say European, it’s not Brussels, Europe.  It’s rule of law.  It’s freedom of speech.  It’s the ability to hold your political leaders accountable.

**Question:**

You mentioned also the damage of Russia to Russians. But at the same time, I see how all revenues in Russia, they’re just growing and growing.  And on the high prices, global high prices and the U.S. half a year ago, the State Department forecasted, like halving of Russian oil revenues by 2030. 

**A/S Pyatt:**

That’s the IEA.  That’s the International Energy Agency that’s predicting this.

**Question:**

Okay, and how the Western Allies and the U.S. will, how would you plan to do this? 

**A/S Pyatt:**

So, we’re going to do it by continuing to enforce the price cap, which is working, and it’s Russia’s own energy officials who acknowledge the losses that their revenues are suffering. The Kremlin’s oil tax revenue is down by 30%.  

What we’ve been trying to do from the beginning, is to reduce revenue to the Kremlin without disturbing the global markets, because the worst outcome is if we shock global markets, oil prices go up more.  And then the Kremlin gets more money for selling less oil.  

What you see us doing first of all, through the price cap mechanism, we are driving Russian oil away from the regular global market.  So, you have a globally traded crude oil market which is transparent, secure, well-regulated, and then you have a shadow market, which is opaque, in which there is a high premium, which Russia pays for tankers for insurance, and where we are going to continue to tighten the noose.  You see that with our sanctions against [inaudible].  You see that with our sanctions against ships and ship owners that have been found to be operating outside the price cap and that’s going to continue, you’re going to see a steady drumbeat of those kinds of sanctions.  

At the same time, we continue to work on other categories of Russian energy.  So, for instance, nuclear, Russia is going to lose the United States as a market for nuclear material.  We still pay about a billion dollars a year to Russia for nuclear materials that Russia sells into the U.S. market.  That’s going to go away.  You know, we are investing, our Department of Energy is investing more than $2 billion to revive the U.S. enrichment industry so we don’t need to rely on Russian materials.  As I said, this is part of the tragedy.  You’ve seen the actions we’re taking in the LNG space as well, where Russia has lost Europe as a market for its pipeline gas.  And we’re going to do everything we can to make sure that that pipeline gas doesn’t find new markets as LNG.

**Question:**

LNG is quite interesting.  That you’re very strict, you’re very tight on this specific segment.  Does it have any connection with your future American LNG projects?

**A/S Pyatt:**

The most important thing is, it is a sector that is extremely vulnerable for Russia, because we don’t have that same worry.  Because Russian gas and because gas has not traditionally been a globally traded commodity where it moves from market to market around the world, we can squeeze very hard without causing a shock prices.  It’s helped by the fact that you have a lot of new capacity coming online from Qatar, from the United States, from new markets, like new producers, like West Africa.  

And as I said, you’ve seen a very strict U.S. regime of sanctions against new projects like Arctic LNG 2, UST Luga, against the Arctic Class ships, against shell companies that Nova Tech has established.  I think the fact that the Arctic LNG 2 production timeline has been pushed back shows that this is being effective and LNG is one of the sectors that has the highest technological requirements. 

We understand, I mean, Russia is a very, very capable technology country.  I mean, you sent rocket ships into space.  If you know how to build a cryogenic engine, which Russia does, you can figure out how to build a liquefaction train. But we can slow that down because there are certain aspects of the production process, which are so technologically advanced and where there are a very small number of international companies that provide these services, most of which have now withdrawn from Russia. 

**Question:**

But, the amount of money that Russia gets from LNG is much less than from oil.

**A/S Pyatt:**

Right.  Although here in Europe, and you know this, I mean, this has been a huge, huge change in Europe.  I spent this whole week in the Baltics.  I was in Riga the other day for the first time in 10 years.  I used to go to Riga, there was Russia, Russians everywhere.  That’s gone.  In the gas storage in Latvia that used to be filled with Russian molecules, that was filled with American LNG. 

This is Putin’s strategic defeat.  And he has done so much harm to his own country.  

And I just don’t understand it, and it doesn’t it didn’t have to be that way.  And you know, in this energy sector, I travel around the world in my in my responsibilities.  I visit a lot of oil fields, a lot of energy facilities.  I meet Russian engineers all the time.  Because you know, you are everywhere, because you have this history.  Most of them, the younger ones, your age or a little bit older, they all saw Navalny’s death as a tragedy. They all had a hope for a different country.  And you know, as we all do, it’s not going to happen under this leadership.

**Question:**

Okay, but coming back to Russian sanctions and embargo and all of this stuff.  The right countries that help Russia to avoid all the sanctions, and especially China, that consumes a lot of Russian oil, coal, and gas. And most of this trade is going on Yuan, not Dollar.  Does it bother you somehow?  What will the U.S. do?  What’s your stance on it?

**A/S Pyatt:**

Right.  So, I think there are a couple of aspects of this, I think.  I try to remember history.  And if you look at history, there are a lot of fundamental strategic differences, which make me very, very skeptical of any kind of long-term strategic relationship between Moscow and Beijing.  

I will also say, I’ve lived in China, I worked in Hong Kong.  I think the Chinese must look at Putin and his actions in Ukraine and think this guy is crazy.  Russia has put itself in a situation where its principal military allies are now Iran and North Korea – two of the quintessential failing states.  

That’s not what China wants to be.  China wants to be the center of the international system.  It wants to be a center of biotechnology and artificial intelligence and manufacturing and is on its way to becoming the largest economy in the world. 

And we have – the U.S. and China – have a very, very important economic relationship.  We say that all the time.  The U.S. government, European governments have made clear our concern that some of China’s actions vis-a-vis Russia are impacting core interests.  I think there’s a particular concern about some of the military relations that are emerging between Russia and China in Ukraine.  We’ve spoken publicly about some of that, including my boss Secretary Blinken.  

But ultimately, I think again, this is part of the tragedy, the Russian tragedy of this whole period.  It’s very clear to me, the requester in that relationship is now Russia.  China is going to behave in China’s interests and I don’t think China sees a long term interest in a partnership with a Russia which has behaved in such a disruptive and revanchist way.

As I said, I’ve lived in China.  I’ve lived in India for seven years, in Pakistan for three years.  So I’ve spent a lot of time in the China neighborhood.  The Chinese think strategically, they think over the long term.  They have great expectations for their future role in the international system.  But they’re essentially a conservative society. And nothing about what Russia has done in Ukraine over the past 10 years is conservative.  It’s exactly the opposite.  It’s revanchist and disruptive.  

**Question:**

Okay, then, under what circumstances, the U.S. will lift sanctions against Russia.

**A/S Pyatt:**

So, I don’t want to speculate on what the future is going to bring.  But what I can tell you is it’s going to take a long, long time.  A lot of the sanctions are now written into law.  So, it’s not something that the White House can decide on its own.  It will take an act, vote of Congress to change that.  And there is deep, deep outrage.  On both sides of the aisle in Congress about a lot of Russia’s behavior.  In fact, ironically, oftentimes, in my engagement with Congress and the State Department’s engagement with Congress when it comes to Russia, we are asking for caution – give us a little more time because we want to work the diplomacy.  So, I don’t think these sanctions are going away.  

As long as I’m working on these issues, and I think you know, certainly as long as Russia is occupying Ukraine’s internationally recognized borders, the United States is never going to recognize that. I made that point in the spring of 2014, after the invasion and so-called annexation of Crimea.  And it’s as true today as it was then.  Thank you. 

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Bureau of Energy ResourcesEnergyEnergyRussiaUkraine

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