Page 11 - NorthAmOil Week 39

NorthAmOil COMMENTARY NorthAmOil

Russian LNG potentially poised

to take market share in Europe

US efforts to sell more LNG to Europe stand to be undermined by expanding

production of the super-chilled fuel in Russia, which could be cheaper for

European countries to import

GLOBAL THE US is seeking to sell more LNG, including He cited European Commission data on LNG
to Europe. However, efforts to sell to Europe flows to the EU.
WHAT: appear likely to be undermined by the growth According to the Commission’s gas market
Rising Russian LNG of Russian LNG supplies – even as certain Euro- report for the first quarter of 2020 – the lat-
production could pean countries continue working to reduce their est quarter for which data are available – LNG
undermine US efforts to dependence on Russian gas. imports into the bloc have continued to rise,
sell more LNG to Europe. The global LNG market continues to strug- going up by 26% year on year to 25bn cubic
gle with oversupply, with the coronavirus metres. This was equivalent to 28% of gas
WHY: (COVID-19) pandemic adding to the uncer- imports from outside the EU – the highest pro-
Russian LNG may be tainty surrounding shorter-term consumption portion ever.
more favourably priced expectations. Even in the longer term, however, It is worth noting that it was towards the
than cargoes from the US the widespread availability of LNG means that end of the first quarter that European countries
Gulf Coast. cost-competitiveness will be crucial for export- started locking down in response to COVID-19,
ers of the super-chilled fuel. And in Europe’s so demand and imports can be expected to dip in
WHAT NEXT: case, Russian LNG could prove more cost-com- the subsequent quarter. Nonetheless, the overall
Qatar is also stepping petitive than US LNG. trend is an upward one.
up competition in the If this plays out, it will raise questions over In the first quarter, the US was the leading
LNG market with an whether US opposition to the completion of the source of LNG imports into the EU, at 30% of the
aggressive pricing Nord Stream 2 pipeline was for nothing. total. This was followed by Russia with 22% and
stance. Qatar with 15%. This marked a contrast to most
Competition of 2019, when imports from Russia exceeded
The issue was highlighted in a series of Septem- those from the US, the EC noted.
ber 27 tweets by Russian news service RBC’s eco- Even as LNG imports rose across the bloc
nomics editor, Ivan Tkachev. – led by Spain, France and Belgium – the EU’s
“There’s narrative that US wants to kill Nord import bill fell. In the first quarter it came to
Stream 2 [because] it wants to sell more LNG to €3.3bn ($3.9bn), compared with €4.8bn ($5.6bn)
Germany/Europe,” Tkachev wrote, before going in the same quarter of 2019, reflecting the decline
on to examine current European LNG demand in LNG prices.
dynamics and how they are expected to evolve. While Russian pipeline gas supplies had

In the first quarter, the
US was the leading
source of LNG imports
into the EU, at 30% of
the total.

Week 39 01•October•2020 www. NEWSBASE .com P11