Page 6 - FSUOGM Week 32 2019
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FSUOGM COMMENTARY FSUOGM
Russia to bank on LNG
to defend gas market
share in Europe
Russia faces competition from LNG in Europe, but developing its own LNG capability could be the answer
EUROPE
WHAT:
Russian piped gas exports have declined in 2019 after several years of growth.
WHY:
EU LNG imports are at an all-time high.
WHAT NEXT:
Russia needs to develop its own LNG capability to meet the threat.
AS Russia’s  agship Nord Stream 2 project draws closer to completion, its state-owned operator Gazprom is  ghting to defend its market share in Europe from a rising tide of LNG supplies.
Russia has managed to steadily increase its gas sales to the continent in recent years, capital- ising on rising demand on one hand and declin- ing indigenous output on the other.  e country has been better placed to  ll this supply gap than its competitors thanks to low costs and spare production capacity.
Piped Russian gas exports to Europe reached a new high of 201.8 bn cubic metres in 2018, with their share of supply expanding from 34.2 to 36.6%, defying EU e orts to diversify import sources. Supplies faltered this year, however, slumping 5.6% y/y in the  rst half to 102.8bcm. Meanwhile, European imports of LNG rose 50% y/y in the  rst  ve months of 2019, according to Edinburgh-based consultancy Wood Macken- zie, which expects full-year supplies to reach 71bcm, up from 32bcm in 2018.
“Flows will built into 2020 as US LNG start- ups continue, and we expect a record number
of global LNG FIDs this year,” WoodMac gas analyst Kateryna Fillippenko said in a recent research note. “These will underpin another wave of LNG in the mid-2020s, competing with Russian piped gas for market share.”
As US output expands, suppliers are increas- ingly opting to sell their volumes in Europe because of a smaller price di erential with the Asian LNG market.
“Given the transport costs, exports of LNG to Asia are therefore less appealing than exports to Europe, particularly for market players in the Atlantic basin,” the authority of the Dutch port of Rotterdam, which recorded a 93.9% growth in LNG imports in the  rst half, stated last month in a report.
While gas demand is expected to be mostly  at, European LNG imports are set to rise 4% each year up to 2024, the IEA forecasted in June, reaching 86bcm. During the same period, Rus- sian piped gas to Europe will remain in line with last year’s level, according to the agency, with their share of demand dipping slightly to 33-36% by 2024.
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w w w . N E W S B A S E . c o m Week 32 14•August•2019


































































































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