Skip to main content

The US again failed to persuade the Europeans to buy gas from them, not from Russia

порт
© gazprom.ru

In 2017, Gazprom supplied 8.25 billion cubic meters of gas to Austria – by 40.7% more than in 2016. The historical record, settled in 2005 – 6.8 billion cubic meters, was broken in early November. Alexey Miller, the Chairman of the Management Committee of Gazprom PJSC, and Rainer Seele, the Chairman of the Board of OMV AG, announced these figures during a working meeting that took place in St. Petersburg at the end of December. "Forpost" tried to find out – is someone able to beat Gazprom in the competitive struggle for a share in the energy market of the Old World?

In mid-December, Head of the Bureau of Energy Resources of the US State Department, Sue Saarnio, visited Kiev, Vienna, and Berlin. The purpose of the tour was agitation against the construction of the Nord Stream 2 gas pipeline, which would increase the supply of Russian gas to the EU. First of all, to Germany and Austria.

In her interviews, the politician did not hide the fact that the United States is planning to become a superpower in the global energy sector. Truly speaking, she constantly said that it is not necessary for America to "sell oil or gas to someone", but solely because she is very much "concerned about the energy security of Europe".

The US offers Europeans to import liquefied natural gas (LNG) in order to ensure this security. It is planned that the LNG terminal Independence, built in Klaipėda (Lithuania), will become a kind of gate through which LNG from American tankers will flow to European consumers.

танкер
© gazprom.ru

"We are talking about the North-South Corridor that extends from Świnoujście in Poland to the island of Krk in Croatia and includes all the necessary connecting parts of the Three Seas Initiative – a project that would connect the Baltic, Adriatic and Black Sea," – Sue Saarnio comments on plans to seize the European gas market.

Talks about the diversification of energy supplies to the EU have been going on for a long time, throughout the last decade. Two years ago, when the United States, which previously acted as a hydrocarbon importer, began exporting LNG, this rhetoric has increased. European consumers are constantly exposed to the inspiration of the idea that over-dependence on Russian gas is in conflict with energy security. But actually our country has been supplying Europe with raw materials for almost half a century, ensuring the successful development of its economy, and Gazprom's share in this market is not so great – only about a third.

At the end of 2016, the European Commission presented the "Clean Energy for All Europeans" draft of the new fourth energy package for discussion. It is expected that its successful implementation will additionally attract 177 billion euros of public and private investment annually, starting from 2021. Due to the implementation of this initiative, the GDP growth of the EU countries will be 1% per year from 2020 to 2030. The new energy package also aims to bring the share of electricity production from renewable sources to 50% of the total consumption in 13 years. According to the authors, this, specifically, will reduce emissions of carbon dioxide into the atmosphere.

Despite such ambitious plans,during the transition period, Germany, the largest EU economy, and a series of other countries, will have to consume more and more gas, which is recognized as the purest traditional energy resource. It must completely replace coal and oil. In addition, according to forecasts, Germany will close the last nuclear power plant in 10 years, and France will cut the production of nuclear energy by half.

"Until now, coal is still playing a significant role; it is 20% in the total balance. It accounts for 40% of all CO2 emissions," – says Rainer Seele, Chairman of the Board of OMV AG. – "The European automotive industry is switching to electricity. Because the demand for electric vehicles is a growing. The question is: where will we take this electricity? I hope that not from coal-fired power plants. Because then the climate targets will not be achieved."

Райнер Зеле
© gazprom.ru

To achieve them, Europe develops "green energy" and increases the export of "blue-sky fuel". The US, claiming to increase its share in the European gas market, constantly turns the conversation where it should be purchased, to the political level. At the same time, the Germans, the Austrians and representatives of some other EU countries talk about economic expediency, desperately fighting off America's persistent attempts to impose an expensive LNG on them and impose sanctions on Nord Stream 2.

"There are not so many places in the world where, except Russia, Germany could receive so much gas quickly," – says Jonathan Stern, lead analyst for the natural gas exploration program at the Oxford Institute for Energy Studies.

It is hard to disagree with him.For example, Algeria's share in the EU gas market is about 10%. It will require huge investments in infrastructure to increase the share. After commissioning in late 2018, the Southern Gas Corridor, coming from Azerbaijan and Turkmenistan, will be able to cover only 2% of European demand. Gas from Qatar is one of the most expensive. Moreover, the projected increase in consumption in the countries of Southeastern Asia and the long-term nature of contracts, concluded with consumers in the region, will not allow the release of a sufficient amount of raw materials for supplying of Europe. In Libya, production is expected to stagnate in the near future, and the region is characterized by political instability, lack of investment and infrastructure.

25 LNG receiving terminals, which are built in the EU, are now loaded by hardly a quarter. In the Old World, selling LNG is not very profitable for producers. Due to the presence of the Gazprom in the market, the prices are not high enough, therefore tankers are mainly sent to Asia. Including the US. Only 30 of the 230 LNG carriers from the US arrived in Europe, the rest went to the shores of Mexico, South Korea, and China.

According to most experts, this indicates that America will not be able to press Russia in the European energy market. And it will not be possible to persuade the European partners to abandon the Nord Stream 2 project, which is economically advantageous for them.

Северный поток
© Официальный сайт компании «Газпром»

“This is just a good business for companies participating in the project (European ones – ed.), they are not thinking about security policy now but getting gas from Gazprom at an attractive price. If the US will come with LNG, the prices will continue to decline, Gazprom will constantly knock them down," – says Stefan Meister, head of the Robert Bosch Center for Central and Eastern Europe, Russia, and Central Asia program at the German Council on Foreign Relations (DGAP) in Berlin.– "From a political standpoint, I believe that the Three Seas Initiative would be unlikely to succeed. I do not believe that it will be able to attract enough money. Much of this is the rhetoric of the Polish government, which would like to see recognition of its role in the EU as an independent entity."

At the same time, Stefan Meister criticized Austria for her simultaneous participation in the construction of the Nord Stream 2 and the Initiative of the Three Seas."Austria always took such a position: to be everywhere to get the maximum benefit," – the expert on Russia is indignant with the "equivocation" of the neighboring country. – "To be small enough not to rise above the threshold of perception, but at the same time, to take the leading position in the projects... It is obvious that Austria sits between all chairs and uses their political neutrality in order to get the maximum economic benefit."

Austria itself believes that attempts to reduce the existing dependence on established suppliers of traditional sources of raw materials, in particular, on Russian gas, can lead to a number of problems. For example, endanger the security of supply in principle or increase dependence on other market players. That is why the export of "blue-sky fuel" from Russia to this country is at a historical high.

However, despite the favorable economic situation, which does not look perfect only in light of the US attempts to politicize the issue of gas supplies, Russia should take into account the innovations of the European energy policy. With high probability, they will lead to the fact that after 2030, the EU, including the largest importers of Russian gas – Germany, Austria, and others, will reduce the volume of its purchases. This means that our country needs to stimulate domestic demand and actively increase its presence in the Asian market.

Work in this direction has already started. The "Power of Siberia" gas pipeline is being built, the Yamal-LNG plant has started production of liquefied gas, in demand in China, Malaysia, and other countries of the region, and gasification of the country is going on. From 2005 to 2016, it invested about 295 billion rubles. The mean level of gasification in Russia during this time has grown from 53.3% to 67.2%, including in cities – from 60% to 70.9%, in rural areas – from 34.8% to 57.1%. It is planned to build another 24,000 km of gas pipelines by 2020, which will increase gasification speed by more than 2 times.