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European LNG supply

LNG Industry,

Although the US may not reduce Europe’s reliance on Russian gas in the long-term through LNG exports, Qatar might, experts say. However, European dependency on Russia seems likely in the near future.

Cheniere Energy CEO Charif Souki dismissed claims that the US can significantly curtail Russia’s monopoly on Europe as “nonsense” and analysts from BG predict that proposed export projects will transport LNG to Asian markets where demand is highest. Experts at Bernstein Research concluded that “Europe is stuck with Russian gas”.

Last week, US Vice President Biden said that the US would help Ukraine with “technical know-how” to help Ukraine boost its own domestic natural gas production. Biden said that this was a more realistic way of helping Ukraine to divorce itself from gas imports from Russia than exports from the US.

In 2013, more than 50% of Russian imports to Europe were transited through Ukraine. Russia’s annexation of Crimea in March 2014 and the following sanctions imposed on the Kremlin by the West has led to geopolitical fears over Europe’s reliance on Russia’s natural gas. In April, Gazprom nearly doubled the price for natural gas to Ukraine and the Russian President Vladimir Putin threatened to cut off supplies to Ukraine completely.

EU member states currently have more gas than usual in storage and interconnecting pipelines running through European countries including reverse flow pumps (pumping gas from west to east) have been installed by nations in an attempt to reduce reliance on Russian gas supplies.

The future of the South Stream project, a proposed pipeline by Russia and the EU that would run from Russia to Bulgaria via the Black Sea thus avoiding Ukraine, is uncertain.

Eastern European countries such as Poland, Lithuania and Estonia, where anti-Kremlin attitudes are well known, have been investing heavily in LNG infrastructure. LNG from Qatar, the world’s largest exporter of LNG, could act as a means of weaning these countries off gas from Russia, and if Russian relations with the West continue to decline, this will present an opportunity for Qatar to export LNG to Europe.

However, Russian gas can be sold at a significantly lower rate than that of Qatari gas and countries (e.g. Poland) are still tied into long-term contracts with Gazprom.


Edited from various sources by Ted Monroe

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