US to end Russia's monopoly in EU gas market

Gazprom can lose 18% of its revenues.

It became possible due to competition from US natural gas exporters. The Kremlin's Gazpom could lose 18% of its revenues as a result of competition from US liquefied natural gas exports, UNIAN quotes The Financial Times.

European consumers can expect to pay 11 per cent less for their gas as a result of the downward pressure on world prices created by rising US LNG exports, hitting revenues of the Russian state-controlled gas group.

According to an analysis published by the Center for Global Energy Policy at Columbia university, the loss would be significant for Gazprom, but the impact on Russia’s total export revenues would be more modest. Experts think the US gas exports are unlikely to be an effective tool in forcing policy change from the Kremlin.

The analysis also finds that Europe is likely to remain a large consumer of Russian gas, so will need to strengthen its energy infrastructure to cope with potential supply disruptions. Weaker world gas prices are expected to hit proposed export projects in other areas, such as the planned development of the large gasfields found off the coast of Mozambique.

The US shale revolution, caused by advances in production techniques from reserves that were previously not commercially viable, has boosted the country’s gas production and created expectations that the country could become a significant exporter of LNG, at prices that will be competitive in world markets.

Three multibillion-dollar gas liquefaction projects have been given the go-ahead by the Federal Energy Regulatory Commission to start construction, and 13 more have filed applications for approval.

The shale boom has already had a significant impact on world gas markets, by removing the US need for LNG imports, freeing supplies from Qatar and elsewhere to go to Europe and Asia. That has given European utilities and other gas customers greater leverage, enabling them to renegotiate supply contracts with Gazprom.