OAO Gazprom, the biggest natural gas producer, will probably see lower gains in Europe for at least four years as weaker oil prices and rising competition threaten to further cut its profits, a government forecast showed.
OPEC, which controls a third of the global oil market, and Russia, which produces another 12 percent, are unlikely to reverse their output strategy.
Russian energy company Gazprom has made it clear that it intends to move forward with the construction of the Turkish Stream natural gas pipeline as quickly as possible, whether or not the project can overcome political obstacles in Europe.
The dollar was a contributing factor to oil’s crash between June and January as it rose 16 per cent against a basket of other currencies. However, the 60 per cent decline in crude from about $115 to $45 a barrel over the same period illustrates how crude was largely trading on its own fundamentals, as the US shale boom contributed to oversupply.
Last December Moscow took Europe by surprise with an announcement that South Stream, a 63 billion cubic metre (bcm) pipeline designed to bring Russian natural gas to southern Europe across the Black Sea would be scrapped and replaced with a pipeline of similar capacity that would cross Turkey and stop at its border with Greece.
Russian natural gas accounts for roughly a third of all foreign supplied natural gas coming into Europe. Russia’s biggest partner is Germany. In that state, Russia’s presence is on the upswing.
Global oil demand is set to rise by 1 million or even 1.5 million barrels per day (bpd) in 2015, according to a range of forecasters.
Russia has a five year window, at best, to successfully enter the global LNG markets and even that window is closing fast. That sentiment was the major takeaway from the recent Russian LNG Congress in Moscow.
Turkey's relationship with Russia is changing significantly. A domestic economic crisis, low energy prices and European energy diversification efforts have weakened Russia.
On December 1 2014, during his official visit to Turkey, Russian President Vladimir Putin announced the suspension of South Stream, blaming the EU for its “unconstructive” position. In fact, the realization of pipeline had become untenable as a result of various legal, political and financial issues, such as the EU’s Third Energy Package, the Ukraine crisis and the ensuing sanctions over companies involved in South Stream (Stroytransgaz and Gazprombank).