Forbes: Gazprom says it can com­pete with U.S. LNG in Europe

Financial Mirror (Cyprus) - - FRONT PAGE -

Rus­sian gas gi­ant Gazprom told Bar­clays Cap­i­tal re­cently that it can com­pete on price with the U.S. liq­ue­fied nat­u­ral gas mar­ket in Europe, when­ever it gets there, ac­cord­ing to a re­port by Forbes.

The U.S. hopes to even­tu­ally make strides into Rus­sia’s nat­u­ral gas mar­ket in Europe, tak­ing away mar­ket share from a po­lit­i­cally volatile neigh­bour.

For­mer Soviet state Lithua­nia signed a non-bind­ing agree­ment to pur­chase LNG from the United States this year. No de­liv­ery dates are set. Poland is also look­ing to the U.S. for fu­ture nat­u­ral gas sup­ply in or­der to re­duce their de­pen­dence on Rus­sia. Lithua­nia opened a float­ing im­port ter­mi­nal last year and Poland plans to open one later this year.

But Gazprom told Bar­clays dur­ing an an­a­lyst visit ear­lier this month that their piped in gas was still cheaper than U.S. im­ports.

Many peo­ple in Rus­sia be­lieve that one of the rea­sons the U.S. is sanc­tion­ing Rus­sian oil and gas com­pa­nies is be­cause Wash­ing­ton wants to make way for nat­u­ral gas ex­ports to Europe in the fu­ture. Rus­sian en­ergy com­pa­nies be­came the vic­tim of Rus­sian pol­i­tics in Ukraine last July and again in Septem­ber when the U.S. and E.U. pun­ished them with sanc­tions.

Gazprom said its mar­ket share in Europe was rel­a­tively flat last year at 31%, up slightly from 30% in 2013. It ex­pects that ex­port prices to Europe will av­er­age $260-270/kcm in 2015, around $100 less than they were in the first half of last year. Gazprom ex­ec­u­tives told BarCap they ex­pect Euro­pean de­mand to pick up by the sum­mer. The com­pany con­firmed its re­duc­tion in cap­i­tal ex­pen­di­tures this year, hit­ting a planned $24 bln as it doesn’t

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