Bloomberg: Cutting off gas flows from Russia to Europe via Ukraine intensifies competition in the LNG market
2 January 12:42
Stopping the supply of Russian natural gas to Europe through Ukraine is likely to increase competition with Asia and lead to higher prices for alternative sources. Bloomberg writes about it, informs
The agency reminds that countries such as Japan and South Korea are heavily dependent on liquefied natural gas. And, accordingly, Europe’s attempts to compensate for the cessation of Russian gas supplies by increasing LNG purchases may not only increase competition in this market, but also raise prices.
“This will lead to a further narrowing of the LNG market. Supply, especially of LNG, is limited, and we see a greater risk of rising LNG prices this year and next year,” Scott Darling, managing director of Haitong International Securities, said on Bloomberg TV on Thursday.
As you know, Ukraine on Wednesday stopped supplying natural gas from Russia to Europe through its gas pipeline. Although this was not a surprise to Europe and they had been preparing for such restrictions, experts estimate that Europe will still have to replace about 5% of its gas and possibly rely more on storage facilities, which have fallen below average for the time of year.
The day before, Ukrainian President Volodymyr Zelenskyy called the cessation of Russian gas transit through Ukraine “one of Moscow’s biggest defeats.” At the same time, he expressed high hopes for an increase in American gas supplies to Europe, as President Donald Trump has already said. According to the Head of State, it is cooperation and maximum offers from partners in the market that will make prices more comfortable.
“The more gas there is on the market from Europe’s true partners, the sooner the last negative consequences of Europe’s energy dependence on Russia will be overcome,” the President of Ukraine said.
Another thing is that the supply resource may be limited. At least until the new US president begins to fulfill his duties and promises to American liquefied natural gas producers.
Meanwhile, Europe is closely but calmly watching the developments on the gas market. Except for some politicians in some countries. As Markus Krug, Deputy Head of the Gas Department of the Austrian energy regulator E-Control, recently stated, the relevant services are closely monitoring the events, but do not expect any disruptions in gas supplies, as Austria has foreseen the possibility of obtaining gas from other places and has created reserves.
“This is a big adjustment of the gas flow from east to west, but traders have been preparing and have already assessed the changes,” Markus Krug said, as quoted by
He believes that prices may temporarily rise after January 1, but will likely fall again when the market sees that everything is working.
