Baku, Azerbaijan, July 26
By Aygun Badalova - Trend:
Russia’s proposed new gas supplies to Europe will compete with the US LNG export to that region, analysts of the US JP Morgan bank expect.
Last week a cargo of US LNG landed at Spain's Murgados LNG import terminal, making it the second cargo to reach the European market since US LNG exports began at the end of February.
“From a more structural perspective and with the overall increase in natural gas consumption worldwide, the potential introduction of the Nord Stream 2 pipeline toward the end of the decade, allowing for more Russian gas to reach Europe, certainly does present direct competition to LNG cargoes from Australia and the US,” analysts said in their Natural Gas Outlook report, obtained by Trend.
The Nord Stream 2 project includes construction of two lines of the offshore gas pipeline with a total capacity of 55 billion cubic meters of gas a year from Russia to Germany under the Baltic Sea, in addition to the existing two lines.
The US analysts believe that European countries reliant on Russian gas will look to diversify energy sources for reliability purposes.
However, they don’t exclude that the potential tectonic shifts that could occur in the European Union (started by Brexit) could change strategies and the timing of the execution of those strategies for those countries.
“Most importantly, we will look to Germany, currently exiting their nuclear power program in the wake of the Fukushima disaster and importing over 60 percent of its 2015 natural gas demand from Russia according to the most recent BP Statistical Review, for signals as to the potential impact of this pipeline system on the global LNG market,” analysts said.
Europe has imported 401.4 billion cubic meters of gas via pipelines in 2015, according to BP’s estimations. European countries imported 159.8 billion cubic meters of gas from Russia.
Currently, the main factor of the EU energy policy is the diversification of sources and routes of gas supply.
In this regard, the Southern Gas Corridor, which envisages the gas supply from the Caspian Sea region to Europe, is one of the priority projects for the EU.
The gas produced as part of the Phase 2 of development of Azerbaijan's Shah Deniz field is the main source for this project. Other sources can also be connected to this project at a later stage.