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Russia’s Gazprom Allowed To Sell LNG ‘At Any Price’ In Europe To Counter U.S. Incursions In The Market


12/29/2017


Russia’s Gazprom Allowed To Sell LNG ‘At Any Price’ In Europe To Counter U.S. Incursions In The Market
Its Europe and not Ukraine where the real ‘war’ is being waged between the United States and Russia from a pure economical perspective.
 
In the oil and gas industry, Russia and the U.S. are the new giants. Americans intent selling to the Middle East and Asia is not able to undercut the investments that have already been made by Russia in the far east, the country intends to make sure. The markets in which have traditionally been the strongholds of Russia in terms of natural gas exporters are already being encroached by the U.S. At particular threat are those countries where the governments are opposed of Russia. 
 
The underlying war between the two countries in Europe became evident when Gazprom, the state controlled oil and gas giant of Russia was given a free license to sell liquified natural gas (LNG) "at any price" in order to undercut U.S. exporters and this is being viewed as a retaliatory action to the U.S. singing an agreement with Poland for LNG.
 
According to the Kommersant business daily, starting from January 1, 2018, Gazprom has been allowed to sell gas at an "unregulated price" to any and all companies that are engaged in the business of production and export of LNG and the executive order to validate that direction has already been issued by Vladimir Putin's administration.
 
The Sakhalin-2 project and the Baltic LNG project of Gazprom would only be impacted by the order. On the Baltic LNG facility in Leningrad, there is a joint venture between Gazprom and Shell. Both Lithuania and Poland have been getting LNG shipments from the Gulf of Mexico and the aim of the move is to compete in the market with new LNG plants in those countries.
 
Gazprom would now be able to sell LNG at lower prices than that were fixed under the regulated regime.
 
Gazprom’s request to be allowed to change over to unregulated prices with export-oriented gas chemical companies also was not however granted by the Kremlin.
 
In the European market, the U.S. is providing some serious challenge to Russia. U.S. wants to convince the energy policy makers of European countries to stop their reliance on Russian KNG and instead consider importing U.S. gas. This has emerged due to the growing animosity between Russia and the U.S. on the gas front. 
 
There are only two facilities in Poland and Lithuania that are able to import natural gas from foreign countries and this makes it abundantly clear that in Europe there are not enough infrastructure for LNG storage. This makes U.S. LNG somewhat costlier compared Gazprom which supplies LNG to Europe through a network of pipelines.
 
(Source:www.forbes.com)


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