The Dominion CovePoint LNG Terminal in Lusby, Md., in the Chesapeake Bay was designed to import several hundred tankers a year. (File Photo by Ricky Carioti/The Washington Post)

One of the companies most entwined in the natural gas business in Europe is the Italian oil giant ENI – and that has put it smack in the middle of the crisis between Russia and western nations.

ENI is the biggest seller of natural gas in Europe, providing 22 percent of the market. It is also the biggest customer of the Russian gas monopoly Gazprom, worth about 10 billion euros a year, and it might join with Gazprom to build a new pipeline under the Black Sea. It has a deal with Russia’s biggest oil company, Rosneft, to explore in the Barents Sea. It also has rights to look for shale gas in Ukraine and plans to propose reworking some old neglected oil and gas fields there to boost output. And it is the largest natural gas producer in Libya, a key source of natural gas for Europe. Altogether, ENI operates in about 90 countries.

On Thursday ENI’s chief executive, Paolo Scaroni,  was in Washington to meet with Obama administration officials at the State Department and National Security Council to discuss natural gas, Russia and Ukraine.

Scaroni was visiting on the heels of hearings in Congress where lawmakers were calling on the administration to approve more liquefied natural gas (LNG) export terminals so that LNG from abundant domestic shale gas reserves could ease European dependence on Russia.  But the committees didn’t get to hear from anyone with Scaroni’s background and distinctive points of view.

The CEO took an hour to talk with The Post. Here are some excerpts from the conversation.

On Europe's need for Russian oil:

This Ukrainian crisis showed finally that the king is naked, that Europe is not independent -- because if you’re not independent on energy you’re not independent. People say Russia needs Europe, as well. But we need energy every day, and they can skip a year. It’s a different level of urgency and dependency.
What is relevant is that this dependency is going to go up and not down because domestic European production [including North Africa] is going down. Norwegian production is not going up. Algerian production is going up, but Algerian domestic consumption is going up, too. And Libya is Libya. We are the persons in the world who know Libya best, and we know nothing. I was in Libya last Sunday. We have 3,000 people there and still we don’t know much.

Scaroni takes a dim view of American LNG as a means to liberate Europe from Russian gas, in part because he says that transporting LNG from the United States to Europe is expensive, Russian gas production costs are very low and Russia could always decide to undercut American LNG prices.

Everyone is asking the question: How can Europe live without Russian gas?
American LNG is a slogan. It will take five, six, seven years, not five months. Economically, who’s going to invest this money for exporting into Europe when American shale gas will land at $9 [per thousand cubic feet] at best. [European gas prices are currently about $11 per thousand cubic feet, he said.]
If you take an economic decision, you need to be sure that this $9 will not be uncompetitive because the Russian gas can be sold at $6. We’ve been producing gas in Siberia until a month ago. We sold our Arctic Russia operation for $3 billion, just in time. We had a field and we know the cost. We’ve done it. It is less than half a dollar. If you can export into Europe, and if Gazprom puts the cost at $6, what do you do with your liquifier?
For me the idea of exporting LNG from the U.S. is theoretically possible but…
It could be completely different if there is a sanctions regime ….  If you say buying gas in Russia is illegal, that’s another thing. But are we there? I don’t have that impression. And even if we were there, are sanctions going to stay on forever? I hope not. But your investment [in LNG terminals] needs 20 years not 20 months.

Scaroni fears that European industries, such as the petrochemical industry, cannot compete with U.S. companies that have cheap natural gas at home. He predicts more European companies will move plants to the United States unless Europe starts to drill more aggressively for its own shale gas.

I say embrace shale gas or embrace Russia. The Russian option is no longer an option, so we should pursue shale gas vigorously and then look at whether we should be shutting down nuclear plants in Germany.

But Scaroni said there's no guarantee Europe has rich shale gas reserves. Like other major companies, ENI drilled in Poland and then abandoned it because the gas was deep and there wasn't enough of it to make it commercial.

As a businessman, Scaroni also worried about the fate of the proposed South Stream gas pipeline that would go from Russia under the Black Sea to Bulgaria, Romania, Serbia and Austria. The pipeline, a joint venture between Gazprom and ENI, would circumvent Ukraine, currently one of Gazprom’s three main paths to Europe.

The project, from a commercial point of view, I love it. I don’t want to have the Ukraine problem for my clients. But from a political point of view, South Stream will perpetuate the dependence of Europe on Russian gas. That’s one reason I see clouds over the project now. Political clouds, not commercial clouds, because commercially it makes a lot of sense.

There is a lot of talk about the United States using its new oil and gas resources to engage in energy diplomacy. Scaroni was skeptical.

If it were not for the shale gas, the United States would be dependent on foreign gas. So it would be diplomacy for somebody else against the United States. So it is a positive to be freed from this.

ENI has political challenges elsewhere, too. It is the biggest oil company in Egypt, Scaroni says, and it has substantial operations in Venezuela, recently torn by riots and which many other oil companies have left after contract disputes with the leftist government.

What about the political situation in Venezuela? I don’t know, and we don’t care because at the end of the day people will need oil and gas. If I could find oil in Switzerland I would be in Switzerland. But since it’s in Venezuela, what can I do?