On the background of the planned reduction of energy prices, depreciation of the value of hydrocarbons reached Europe. According to the forecast Goldman Sachs, in 2018 and 2020, the cost of 1 million British thermal units (BTU) of natural gas in Europe and Asia will not exceed 4-4,2 dollars. In this situation, the supplies promised by the EU and Ukraine, American gas become unprofitable, which could put the US plans for gas expansion.
This situation does not allow American terminals to grow steadily, and especially to increase exports to Europe, where gas is still to be delivered. And if the cost of natural gas in Europe and Asia cheaper, even maintain gas supplies over there from America, not even to increase them, will not be profitable.
Recognize this, and in the United States. So, according to the report of the Center on global energy policy at Columbia University (SIPA, the main public research centre in the United States in the field of energy), the expected increase in domestic gas prices in the United States coupled with continued very low gas prices in Europe and Asia will put an end to the plans to ensure «alternative to gas from Russia», as the U.S. is constantly talking to its customers for several years.
Against this background, the position of Gazprom in its key European market looks quite stable. The decreasing of the prices for gas the Russian monopoly looks tactical losses, the Russian giant will win on the growth of its share in the European market.
Yet, says a leading analyst GK TeleTrade mark Goikhman, Russia remains the most promising supplier of gas to Europe. And here the economic reality trumps policy, in the light of which the leaders of many European countries would like to limit the import of gas from Russia. There was hope for its replacement by liquefied natural gas (LNG) from the United States. But it becomes unprofitable for Americans in long-term prices for LNG in the United States in the area of 3.6 to 4.9 per 1 million BTU and intra – level $ 4.
At the same time, the gas demand for emerging from the crisis, Europe is constantly increasing, the expert believes. Now the demand for gas in Europe is about 400 billion cubic meters per year. According to «Gazprom» by 2025, we will need additional amounts to 145 billion cubic meters, and by 2035 – 185 billion Production in Europe itself can not provide this demand. British think tank European Center for Energy and Resource Security, believes that by 2035 the shortage of production in Europe will reach 90 billion cubic meters.
Russian gas is able to overcome the prospective deficit. This happens in the case of construction of gas pipelines Nord stream-2 (55 billion cubic meters) flows South and Turkish – (60-63 billion cubic meters each). They collectively will provide about 180 billion cubic meters. Furthermore, it would ensure the overcoming of transit through Ukraine, which is a risk factor for European consumers. However, launched in 2015, a LNG terminal in the Polish port of Swinoujscie will not go unclaimed, says real. Its capacity is 5 billion cubic meters. And it focuses on the reception of LNG from outside the US, and Qatar and Norway.
It is important to note, warns the partner practice of «Industry» consulting group «neo Centre» Alexander Raksha, that Europe strives to make its gas market differentiated without creating a situation where someone else share exceeded 30-35%, so in this situation to talk about a struggle for a privileged position I’m wary of. Meanwhile, the fact the opposition always felt with the 2012-13 year, the risk of the arrival of cheaper LNG from the United States were periodically given the chance to reflect on the feasibility of pipelines in the EU. But as they say, everything is relative – in the past period, LNG was unable to create strong competition because of complex pricing, rather it is highly dependent on consumers and behavior of traders on the exchanges.
The price of LNG on spot markets, as shown, can be very high and very low, which makes the transportation of gas from the United States is unreasonably expensive. In this situation, of course, the expert says, save contracts where gas is sold at a fixed price, but that’s all it is no longer about the European market, but rather of Asia, Japan and South America.
Meanwhile, one of the most serious problems for us LNG is price on its domestic market prices of gas, suitable for further production of LNG at Henry Hub in America, as befits the law of the market, are going to grow, and it forces further manufacturer and supplier to raise the price of the product. If we add to this scheme the expensive freight of the vessel with special equipment for such transportation, we are left with expensive LNG, which translated into 1 thousand cubic meters of gas in Europe on the same spot market have a priori can not be cheap, otherwise the producers of this LNG will earn nothing.
In other words, the pricing in the US has a serious impact on its dominance in the LNG market. If you go to the numbers, the price per 1 million British thermal units (BTU) at Henry Hub is gradually coming up, and now gas is trading at the most critical threshold for LNG producers – if it will exceed 3 dollars per 1 million BTU, to carry the gas tanker will be completely unprofitable because the cost of a similar volume in the hubs in Europe according to the General forecasts will not exceed 4-4,5$. In other words profits for American companies to get is just not anything else to become profitable, you need to seriously affect the domestic market and to adjust the price manually but then it will seriously affect the gas industry, which will have to choose to suffer losses and to maintain the image of the exporter of LNG is available, or to make money. Something tells ironically Alexander Raksha, what kind of sacrifices Americans to go you will not agree.
Added fuel to the fire and the situation with prices for LNG in Asia, where this kind of gas in recent years has become increasingly popular since the beginning of the year spot prices had fallen by 40% in APR over 1 million BTU gave us $ 6., at the end of 2016, the same amount is released in $ 10. This situation is caused by a decrease in demand from Japan and South Korea, as well as by expectations of market participants of the introduction of new production capacity in Australia. So the supply on the world LNG market by 2020 due to the announced plans of companies in both the USA and Australia, can create a situation where the buyers will be able to secretly influence the price and producers will be forced to seek a compromise in the formation of prices.
As for the position of Gazprom on the European market, in a situation with unfavorable prices for LNG, he is a bargaining chip in the negotiations with the European partners in the Nord stream — 2, whose fate now will be decided, said Alexander Raksha. According to him, now the chances are already very high, as the experience of the last years the Europeans much more profitable to buy gas at the contract – pipeline guarantees uninterrupted supply, also do not need to build additional points of reception and processing of LNG, which require large expenditures.
The same example with the construction of the świnoujście terminal in Poland has not been positive. Formally, it is necessary to observe the poles of the internal gas law that restricts the purchase of fuel from one vendor in the amount of not more than 70%, and with 23 years not more than 33% since now Gazprom supplies to 80%, it will create preconditions for reduction of its share and potentially opens the door for LNG from the US, but Poland is likely still many times think, and whether this terminal and alternative supplies, if they are under contract can be more expensive than gas from Russia.