Tuesday, July 23

Battle for Europe’s gas market: Russia may overthrow the US

Pinterest LinkedIn Tumblr +

How will Europe’s gas market and its suppliers change?

The catastrophic decline in global demand for heat transfer agents, which was aggravated by the warm winter, caused serious losses for industrial companies. Therefore, competition in the segment is quite tough, especially between the USA and Russia, which are fighting for the European gas market.
Over the past few years, the United States has been expanding its production of liquefied gas and has become one of the top three suppliers of liquefied gas, yielding to Qatar and Australia. Large volumes of fuel exports have been made to Europe, where Russia, in turn, has a good position as the main seller of raw materials. Until recently, the main advantage of American LNG was its price, which is less than usual gas. However, the sharp drop in fuel costs on the world market has resulted in the U.S. losing the main advantage of LNG, and European consumers prefer to buy traditional raw materials from proven suppliers, which includes Russia.
LNG is extracted from oil shale deposits, most of which are in Texas. However, due to the pandemic and its consequences the producers found themselves on the verge of bankruptcy, had to suspend the work of drilling towers, and freeze a number of projects. Banks, in their turn, are unable to provide full financing, which leads to the destruction of the industry.

The collapse of oil and gas prices became profitable for buyers. Now they can fill the reserve storage facilities with raw materials at a profitable cost. In addition, there is a problem with fuel tanks, so producers go for good discounts to sell their products. And if earlier European countries used to buy LNG from the USA because of its cheapness, now the difference between price tags between LNG and conventional gas is small, so importers give up on American fuel. And such a situation is in Russia’s hands that it can increase its supplies.
According to experts, the United States will continue to reduce production, which will reduce the share of exports. And this, in turn, will allow Russia to strengthen its position on the market of heat transfer agents.
It should be noted that Russia is not limited to the production of traditional blue fuel. The country is also actively developing LNG production, expanding its supply network through flexible tax schemes.
Last year the USA took the 3rd position on the European LNG export market, but the winter was warm and it became unprofitable for the states to make deliveries, as it is necessary to invest a lot of money into the processes of production, liquefaction and transportation. Therefore, in some cases the US bought raw materials from other producers and then sent them to Europe.
It is not known how American LNG will develop further, but Russia has every chance to increase its fuel exports.

Share.

Comments are closed.