BAKU, Azerbaijan, April 8. A stronger pivot to the Middle East for gas is possible with Qatar poised to benefit, due to robust forecast production growth and available spare capacity to raise exports, while additional pipeline flows from Norway, the UK and Azerbaijan are also on the table, Trend reports with reference to the analysis released by Fitch Solutions.
“For instance, in March, Germany and Qatar agreed to boost long-term energy ties including potential deals for future LNG exports, although Qatar did concede that neither it nor any other single country had the capacity to fully replace Russian gas supplies to Europe with LNG. Algeria also stands in line to benefit from stronger European demand as all possible alternatives to Russian supplies are considered. In February, the US government is believed to have reached out to gas producers operating in Algeria, to discuss their readiness to boost supplies to Europe,” the report reads.
Russian President Vladimir Putin announced that an unspecified list of ‘unfriendly countries’ would need to make payments in roubles in order to purchase its natural gas.
“The move primarily affects European importers of Russian gas, whose current contracts are denominated in the US dollar or Euros but will now need to be settled in Russian roubles. In addition, the move means those that have sanctioned the Russian central bank will have little option but to continue to work with it, as roubles needed to conclude natural gas transactions can be exchanged from the Russian central bank, in the process extending an economic lifeline for the Russian government. The abrupt announcement has been called out for apparent violation of current contract terms albeit Europe’s heavy dependence on Russian gas gives it little leverage in the situation. Existing pipeline gas flows are likely to be maintained, as the consequences of a sudden sharp reduction would be devastating for consumers and businesses, although given the level of dissent being shown from major buyers in the region, this would most certainly strengthen buyers’ resolves to wean off Russian piped gas moving forward,” says the company.
---
Follow the author on Twitter: @Lyaman_Zeyn