RUSSIAN GAS TO EU
Russia will continue to provide competitive natural gas deliveries to Europe until mid-2020 and there is a limited possibility that other sources including LNG supplies, will offset Russian imports significantly, participants at the Flame conference in Amsterdam said Tuesday.
In the wake of the Russia-Ukraine crisis that began last year, the European Commission had promptly provided an updated energy strategy report, seeking measures to diversity energy sources in Europe to increase security of supply. The report mentioned LNG supply as one of the key additional sources of non-Russian gas into Europe.
"With NBP and spot LNG in Asia being on par, we are seeing an increase of LNG berthing in Europe, and this should become the new normal," Thierry Bros, senior European Gas and LNG analyst at Societe Generale. But "Russia and Norway have the market power in Europe," he said.
Looking at the supply and demand picture, Russia remains the lowest cost producer for Europe until 2020 at $6.00/MMBtu (Eur16.60/MWh), and it will not allow US LNG to berth in Europe, according to the analyst. US LNG supplies to Europe indexed to Henry hub prices are estimated at more than $10/MMBtu (Eur27.70/MWh) including all costs, he said.
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