UCF Global Perspectives

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European Natural Gas Market in Flux

Nicholas Maier, Intern, Environment and Global Climate

June 27, 2016

A global oversupply of natural gas may lead to direct competition between US gas producers and Russian gas monopoly Gazprom for share in European markets (Reuters 1). The EU has recently pushed to reduce Russian gas and oil imports, and European Commission President Jean-Claude Juncker recently expressed concerns over a proposed Russia-Germany gas pipeline (Reuters 1, 2). The Nord Stream 2 pipeline would allow Russia to transport twice as much natural gas directly to Germany, bypassing other countries (Reuters 2). In March, several Eastern and Northern European countries warned Nord Stream 2 would destabilize the region, and Polish Prime Minister Beata Szydlo Wednesday said it will divide Europe (Reuters 2, 3).

Russia supplies about one third of the EU’s natural gas and influences regional prices, although Lithuania recently lost a $1.6 billion price-hiking suit against Gazprom (AP; Reuters 2). As gas production booms in the US, Gazprom has sought to reinforce its control of European markets to prevent penetration by US exports (Reuters 1). However, Gazprom’s presence in the EU is likely to remain strong as US exports are routed to growing Asian markets (Reuters 1). Germany’s recent ban on fracking, joining France, could also make the EU’s largest economy more dependent on imported Russian energy (Reuters 4).

 

Sources:

http://www.reuters.com/article/europe-gas-gazprom-idUSL8N19D37B

http://www.reuters.com/article/us-energy-nordstream-eu-juncker-exclusiv-idUSKCN0Z229I

http://www.reuters.com/article/gas-nordstream-poland-germany-idUSB4N17M00Y

http://hosted.ap.org/dynamic/stories/E/EU_LITHUANIA_GAZPROM?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT

http://www.reuters.com/article/us-germany-fracking-idUSKCN0Z71YY


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