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Russia moves in on European gas markets

Published : Monday, 23 March, 2020 at 4:53 PM  Count : 208

Russia moves in on European gas markets

Russia moves in on European gas markets

Russia has seen a silver lining to the fall in oil prices - it now believes the oil price war will help it win the fight for Europe’s natural gas market share.

Russia’s gas giant Gazprom, the single largest supplier of natural gas to Europe, has watched has watched with apprehension the growing volumes of liquefied natural gas (LNG) from the United States that have arrived on European shores over the past two years.  

However, the coronavirus epidemic and oil price crash - though negative for all gas sellers around the world - could cause more damage to LNG exporters than to the loss of Gazprom, Russian energy analyst Alexander Sobko argued in an article in the Russian state news agency RIA Novosti.

“The fall in oil prices will not pull off Russia’s gas,” Sobko argued, adding that long-term LNG contracts, especially for seniors, have been linked to oil prices, involving 32 percent of Gazprom's long-term contracts.

Crashing oil prices are set to reduce the revenues and profits of LNG exporters whose deals start with oil prices. Depressed demand and economic downturn are likely to keep LNG glitz (and direct recession in many mature markets) low on spot LNG prices for a long time, forcing LNG producers to cut profits and potentially delay the final investment decision in new LNG liquidation and export.

At the same time, low natural gas prices in Europe are also hurting Gazprom’s sales revenues, and the pain could worsen next month as European demand will likely be significantly reduced by large economies and industrial activity under lockdown.

LNG exporters to the United States sell growing quantities of super-cool fuels to a growing number of buyers in Europe who want to reduce their dependence on Russian pipeline gas, prompting the United States to “export American nuclear freedom to the world.”

In the European Union data show, Russia was the European Union (EU) natural gas supplier, ahead of Norway in the first half of 2018 and 2019.

According to Eurostat estimates, the share of suppliers excluding Russia, Norway, Algeria, Qatar and Nigeria increased from 5.5 percent in HY 2018 to 5.5 percent in H20, compared to the market share of Norway and Russia.

Elena Bermistrova, director general of Gazprom Export, told Gazprom’s investors last month that the company had a share of 6.6 percent of gasoline usage in Europe and Turkey in 2012.

At the European Gas Conference in Vienna in January, Bermistrova acknowledged that Gazprom’s export to Europe decreased by 25 compared to 20 2018, but a record decline of less than 1.5 percent compared to 2018 volume play He argued that there was a major drawback of LNG and that it was sufficiently consumed. The demand was unable to meet quickly.

The Russian giant has argued that Gazprom's pipeline ensures durability and reliability in gas supply to Europe.

Some European consumers, however, want to rid themselves of Russian stability and reliability, which is often associated with a political value.

The main sales pitch for LNG sales to Europe in the United States – “Independence Gas” can help European countries diversify their gas imports.-Internet


Related Topics

Gas   Trading   Russia  

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