Green Lunacy: Anti-Shale Europe Dependent On Russian Gas As Never Before
Europe has wanted to wean itself from Russian natural gas ever since supplies from its eastern neighbor dropped during freezing weather in 2009. Almost a decade later, the region has never been more dependent.
Gazprom PJSC, Russia’s state-run export monopoly, shipped a record amount of gas to the European Union last year and accounts for about 34 percent of the trading bloc’s use of the fuel. Russia will remain the biggest source of supply through 2035, Royal Dutch Shell Plc said last week, echoing comments by BP Plc in January.
EU lawmakers have had their hearts set on diversifying supplies with liquefied natural gas delivered by tanker from the U.S., where production of the fuel skyrocketed last year. So far, those shipments have failed to materialize amid a lack of firm contracts and higher prices outside Europe. Overall, LNG shipments to the region, led by Qatar, were stagnant last year.
“Russia will for sure remain Europe’s largest gas supplier for at least two more decades,” even if most of the incremental gains in EU imports are met by LNG from somewhere else, said Vladimir Drebentsov, chief economist for Russia and CIS at BP in Moscow.
Gazprom Chairman Viktor Zubkov reiterated on Monday that 2017 European exports are expected to be close to last year’s level.
But the company may face greater competition from LNG this summer as its oil-linked prices become less attractive relative to market rates, according to London-based analysts from Energy Aspects Ltd. to BMI Research.
More LNG will arrive in Europe from about mid-year as new plants start producing the fuel in the U.S. and Australia, increasing supply options for customers. Russian gas will also become more expensive after last year’s 52 percent gain in Brent crude.