Page 6 - FSUOGM Week 39

FSUOGM COMMENTARY FSUOGM

Russian LNG potentially poised to

take market share in Europe

US efforts to sell more LNG to Europe stand to be undermined by growing production of the

super-chilled fuel in Russia, which could be cheaper for European countries to import

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

P6 www. NEWSBASE .com Week 39 30•September•2020