The American-Russian Price War for Natural Gas

A very interesting article by Foreign Affairs, about whether there will be an American-Russian price war over natural gas. See “A U.S. Gas War With Russia”?, May 2016.

In April 2016, the first shipment of American LNG arrived to Europe, and many analysts started talking about a price war between Russia’s Gazprom and the American energy companies. These analysts expect the American LNG shipments to Europe to push Gazprom towards lower gas prices, and also to reduce the Russian geopolitical might over Europe, since the American gas will reduce European dependency on Russian gas. Europe, together with Turkey, consume approximately 450 billion cubic meters of natural gas per year (2015), and Russia supplies approximately 1/3 of it, and earns 42 billion dollars (2015).

According to Foreign Affairs, the American LNG shipments to Europe will have a more ambiguous effect on Russia. The American companies will be able to ship to Europe a maximum of 80 billion cubic meters of LNG per year by 2020. But at the same time the European production is falling by 10 billion cubic meters per year i.e. Norway, Netherlands, England. Therefore a part of the American LNG, if it does indeed reach Europe, will only cover a part of the falling European production.

The Foreign Affairs article also mentions Norway and Algeria, who are the second and third largest suppliers of natural gas to Europe. The American LNG will reach the western coasts of Europe, and it will more likely hurt Norwegian and Algerian exports to Europe than the Russian ones. However nobody talks about a price war between American, Norwegian and Algerian natural gas, but they only talk about a price war between American and Russian natural gas.

Map

Χάρτης Φυσικού Αερίου.JPG

The Foreign Affairs article also mentions Qatar, because the European Union already had access to plenty of liquefied natural gas (LNG) from Qatar. Qatar has significantly increased its exports of LNG to Europe during the last few years, and therefore the American shipments to Europe could hurt the Qatari LNG exports to Europe. Remember that the Qatari and Iranian state owned media passionately supported Bernie Sanders in United States. Bernie Sanders wants to ban the American oil and gas production. See “The Financing of Hollywood’s Socialist Propaganda”.

https://iakal.wordpress.com/2016/05/12/the-financing-of-hollywoods-socialist-propaganda/

Moreover, the producers of natural gas in United States are private investors and do not care about geopolitics, but about where they can get higher prices. And they might get higher prices in countries that do not have access to pipelines of natural gas i.e. Japan, South Korea, Taiwan etc. Japan, South Korea and Taiwan have huge economies, and do not have access to pipeline networks, and they are the largest, the second largest, and the third largest importers of LNG respectively. See for example the figures for 2010.

Largest LNG Importers

Top LNG Importers.JPG

seehttp://www.rba.gov.au/publications/bulletin/2011/sep/images/graph-0911-3-05.gif

 

In 2015 Japan was the third largest economy in the world, South Korea was the 11th largest, and Taiwan was the 22nd largest economy in the world according to GDP. Therefore they all have huge needs for oil and natural gas, especially after the nuclear accident of Japan in 2011 (Fukushima), which made everyone more reluctant towards nuclear energy.

These countries appreciate LNG more than the Europeans, because the European have access to pipeline networks from Russia, Algeria and Norway, and they might be willing to pay for the American LNG higher prices than the Europeans, and therefore nobody can say for sure how much of the 80 billion cubic meters of the American natural gas will reach Europe.

Also note that Qatar, Indonesia and Malaysia, all Muslim countries, are among the largest exporters of LNG, and they mainly export to Japan, South Korea, Taiwan, China and India, and they see the American LNG exports as a very big threat for their economies. At the following Statista diagram you can see that Qatar is the largest LNG exporter in the world, and Malaysia is the second (2014).  If you have read the link I provided above about the financing of Hollyhood’s socialist propaganda, you have already read about Malaysia’s financing of socialist propaganda in United States i.e. The Wolf of Wall Street.

Top LNG Exporters (2014)

Αυστραλία 2.JPG

http://www.statista.com/statistics/274528/major-exporting-countries-of-lng/

Top LNG Exporters (2010)

LNG Exporters 2010.JPG

https://oilandgaslogistics.files.wordpress.com/2013/07/lng-exporters.png

Qatari LNG Exports

Qatar LNG Exports.JPG

http://www.eia.gov/beta/international/analysis.cfm?iso=QAT

Indonesian LNG Exports

Indonesia LNG Exports by Destination 2014.JPG

http://drg.blob.core.windows.net/bunkerpricebody/images/stories/General_photos/111aaalng_exports_destination.png

At the following map you can see the global natural gas market. With circles you can see the main country exports. The blue part refers to the exports by pipelines, and the green part to LNG exports. The bars show the country imports, and the blue parts refer to imports by pipelines, and the green parts to LNG imports. Some countries have both exports (circles) and imports (bars).

The Map of Natural Gas

Ο Χάρτης του Φυσικού Αερίου.JPG

http://sputniknews.com/infographics/20100426/158748785.html

See also “The Map of Natural Gas”

https://iakal.wordpress.com/2016/01/14/the-map-of-the-natural-gas/

and “The Map of War”

https://iakal.wordpress.com/2016/01/14/the-map-of-war/

The Foreign Affairs also mentions Australia, which will significantly increase her LNG production in the next few years, and she will probably become the top LNG exporter in the world, and that’s more important for LNG prices than whether the American LNG will be sold to Europe or somewhere else. Note that Muslim oil and gas exporters who are threatened by the Australian production are financing socialists in Australia, in order to flood the country with Muslim immigrants who can sabotage the Australian production with terrorist attacks. For the time being Australia has managed to defend the socialist propaganda and maintain a hard line towards immigrants who reach Australia through Indonesia, Malaysia etc. See for example Reuters “Australia reaffirms hard-line immigration policy”, May 2016.

Map Australia – Indonesia – Malaysia

Map of Australia.JPG

I agree 100% per cent with the Foreign Affairs observations, and I do not think that the main thing of American LNG exports will be an American- Russian price war in Europe. The main war the Americans will have to fight will be domestically, because Iran, the Arabs and Russia will support American socialists, in order to use them as a fifth column in the United States and jeopardize the American economy and society.

On the other hand the Russians will not be happy to see the American LNG arriving to Europe. It will be one more trouble for the Russians, even if it is not the main one.

Articles

“A U.S. Gas War With Russia”?, May 2016

1st Paragraph

 April 21, the first Europe-bound shipment of U.S. liquefied natural gas (LNG) left the Gulf of Mexico and crossed the Atlantic, a move that has been widely regarded as the first step in an impending gas war between the United States and Russia. As the theory goes, Russia has a grip on the European gas market, which it uses to bully its close neighbors and shush any major European states that push back on its geopolitical ambitions. U.S. LNG, it follows, will break Russia’s stranglehold. It is a cheaper and more reliable alternative. In turn, Russia will either lose market share or compete by lowering its prices. But either way, Europe wins, economically and geopolitically.

3rd Paragraph

By 2020, the United States could be sending roughly 80 billion cubic meters of LNG to Europe a year—about two-thirds of the volume that Russia exported to Europe in 2015 and just under a third of Europe’s entire gas consumption, which is 400 billion cubic meters per year (450 billion cubic meters, if one includes Turkey). It is no wonder that conflict seems imminent: if such a large share of U.S. LNG were to land in Europe, Russia would get pushed out of the market and lose a large chunk of the $42 billion it earned by exporting pipeline gas in 2015.

8th Paragraph

On the supply side, Norway is the second-largest provider of gas after Russia. Algeria is third, although its market share is shrinking. This makes these two countries important players, at least for European countries on the coast, which have direct access to seaborne LNG. These coastal European countries are also where U.S. LNG is likely to land since the ability to move gas further inland is often limited by infrastructure and other obstacles. And yet no one is talking about a looming price war between the United States and Norway or Algeria. That’s not as geopolitically exciting, even though it is far likelier to happen: U.S. LNG will compete in markets where Norway and Algeria are often larger players than Russia. Norway’s exports to Europe have risen in recent years, but Algeria’s have declined substantially. How these two countries react to the changing market environment in Europe will matter a great deal.

https://www.foreignaffairs.com/articles/united-states/2016-05-15/us-gas-war-russia?cid=nlc-fatoday-20160516&sp_mid=51385877&sp_rid=aWFrb3ZvczEwMDBAeWFob28uZ3IS1&spMailingID=51385877&spUserID=MTA3MTc0NjI3NDAxS0&spJobID=921992339&spReportId=OTIxOTkyMzM5S0

“Australia reaffirms hard-line immigration policy”, May 2016

http://www.reuters.com/article/us-australia-immigration-idUSKCN0Y508H?feedType=RSS&feedName=worldNews

 

3 thoughts on “The American-Russian Price War for Natural Gas”

  1. the USA is run by Goldman Sachs, Russia is run by Gazprom
    The US is at war with Russia, that’s correct.It is widely believed in Russia that Obama is shill for the globalists, since he does everything he can to make the EU energy independent from Russia.However this will change if Trump wins 2016 elections, why do you think Putin wants Trump to win?

    http://www.bloomberg.com/politics/articles/2016-03-30/trump-russia-adviser-carter-page-interview

    In October Putin will make Hillary’s emails public and ruin her campaign (russian hackers got her classified emails)

    Trump will win just like Putin wants,Gazprom keeps it’s monopoly in Europe,Trump does US debt reset and withdraws the USA from the UN and NATO
    it will be more like russian-american alliance,Gazprom-Rosneft backs up new petronatural gas dollar,Wall Street manages this new financial system
    https://en.wikipedia.org/wiki/Energy_Triangle

    and don’t forget, to disrupt flows of energy from the Middle East to Europe and prevent Turkey from becoming a natural gas – oil hub,someone helps to create Great Kurdistan

    anyway, good job Iakovos Alhadeff, keep doing, you are 100 percent right

    Like

  2. Latvia is unique place where to establish gas hub for EU because of natural underground huge storages but undeveloped. One such developed belongs to Gazprom and they keep everybody balls tight thatswhy. If US would come with money than organizing for strategic purposes such UGS would be keeping balls of Russia in the same day after announcment of such idea.

    Like

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