The U.S. and Russian gas war


The price of European natural gas has been dropped to its minimum this week due to the pursuit of the market share between the U.S. and Russia.

“As two of the world’s largest gas producers, Russia and the U.S. are natural competitors in what seems to be a race to the bottom, not only in the lucrative Asian market but now also in Europe,” said Carlos Torres-Diaz, head of Rystad’s gas markets research.

For the U.S., the maintenance of his share leads to the reduction of income. Russia, meanwhile, faces with low prices, but it has its advantages of its location: it can get the access to West European markets both pipelines and ships that can transfer liquid natural gas (LNG). The U.S. does not export natural gas in its favour because of limits of transporting it by sea.

Despite the price reduction, the U.S. and Russia have raised their exports suddenly in 5 months this year. Although Russia remains steadfast, the U.S. is an increasing strength: the annual export of LNG in 2018 has raised up to 13 times in contrast with 2016.

After calling LNG a “freedom gas” by the Department of Energy, the U.S. and Russian war is gaining momentum. This term presented itself as a not-so-subtle dig at Russia when Secretary of Energy Rick Perry noted the European dependence on Russian energy exports.

Nord Stream 2 pipeline is being built through the Baltic to Germany in order to export LNG around Eastern Europe. Germany supports the project while the other countries under dependence of income a transit way are against it. Moreover, the U.S. sanctions against this project are developed.

If Nord Stream 2 worked online and terms of the transport of LNG between Russia and Ukraine would not be negotiated, the gas war could break out.

Natalia Veselnitskaya – official website

Natalia Veselnitskaya
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