“Guarantee price improvement”: why the United States is bluffing about replacement of Russian gas

Washington takes the threat to overthrow the Russian hegemony in the European gas market. Another American tanker with liquefied fuel to get to Lithuania, which like other countries, Baltic countries, and Poland, intends to abandon hydrocarbons from Russia. Projects that will allow you to do exist. But their implementation requires time and substantial investment. There is reason to believe that it will take at least a decade during which the US will have to put pressure on oil prices depends on the cost of “blue fuel”.

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The injection of the situation around the alleged total monopoly of the European gas market from Russia continues. Washington tries to prevent this trend and announces the beginning of self-expansion of the market of the Old world. A tanker with liquefied natural gas (LNG) from the United States, which docked recently in Lithuania – the visual work of the Americans in this direction. Given that Washington is actively opposed construction of the pipeline “Nord stream – 2”, threat gradually squeezing Russia out of the European fuel market is quite real.

However, to say that the Americans can do it, as of yet. The US is not able to compete with Russian fuel prices. According to leading analyst AMarkets Artem Deev, the price of LNG exceeds the cost of pipeline gas by 25%. Last year the average cost of thousand cubic meters of Russian “blue fuel” was $167. This year “Gazprom” predicts quotes of $187. Supplies of American LNG to the Europeans cost about $240 per thousand cubic meters.

Energy Minister of Lithuania, leader of Vicunas hopes that the strengthening of the US competition between suppliers of raw materials “ensures better prices” for importers. However, such assumptions seem too bold. Now in the U.S. at full capacity, there is only one place Sabine LNG export terminal with a capacity of 6 billion cubic meters per year. These volumes allow to cover the needs of the Baltic States in the “blue fuel”. However, Poland, which annually purchases abroad 15 billion cubic meters, this is not enough. In addition, most of LNG the Americans sent to Latin America, where delivery of the raw materials are cheaper overseas than in Europe.

However, soon the States are going to introduce three queues Sabine, increasing the total terminal capacity to 24.5 billion cubic meters. Only this is not enough. For the first half of 2017 the export of “Gazprom” to Europe grew by 12.3%, or 10.5 billion cubic meters. Only this time the contracts with the EU from Russia was delivered to 95.7 billion cubic meters. The capacity of a single standard LNG tanker is 155 million cubic meters of liquefied or 95 million cubic meters of natural gas in its natural state. That is, a thousand times less than the volume that drives the pipes Russia. To oust our country on the European market the United States will have annually to send to Europe a few hundred carriers. If you calculate how much time is spent on transportation, liquefaction and regasification (the conversion of LNG from liquefied to gaseous state), American “blue fuel” as an alternative to Russian raw materials while not tenable.

According to the analyst FxPro Alexander kuptsikevich companies, the purchase of LNG from the United States — a purely political question. But Europe since the recent crisis forced everyone to pay more attention to the financial side of the question. “Perhaps the Baltic States and Poland will insist on more lenient terms of payment for fuel at the first stage. Rather it is an attempt of the Europeans to use the time to prove that they have a choice,” — said the expert.

In addition, do not forget that the quotes gas are tied to oil prices. Increasing the export of shale “black gold”, the Americans will put pressure on the cost of gas, a reduction of which will lead to their negative profitability. In this regard, even political intrigue will force Europeans to change traditional routes of import of fuel from Russia. American LNG will be competitive only with the same raw material from Norway, the costs of production of which in the North sea, however, is also higher than the cost of Russian pipeline hydrocarbon by about a third.

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