Moscow. July 13. INTERFAX.RU – Experts Fitch Ratings international rating agency believe that the traditional gas suppliers to Europe, including “Gazprom”, will face pressure, mainly from the liquefied natural gas (LNG)
“We expect. increased competition among gas suppliers in Europe, and that European gas prices will be largely based on spot prices, not tied to petroleum prices, “- says the Fitch report,” The medium-term outlook for the European gas market “
gas prices fell in 2015, making last year’s difficult for manufacturers worldwide. In Japan, it was observed the most significant decline (46%) due to a decrease in average import prices of LNG, according to the report of the World Bank, to $ 8.5 per 1 million British thermal units (the BTU) at the end of 2015 compared with $ 15, 5 year ago.
This trend has continued in the current year, and, according to Platts’, the spot price of LNG to Japan and Korea in June fell to $ 4.5 per 1 million BTU. Since the prices are at the lowest level in many years, was followed by cancellations and delays the construction of new LNG production projects and production of conventional gas, according to a Fitch report.
“The European gas demand declined in 2010-2014, as as cheaper coal and low prices for CO2 plus the abrupt development of renewable sources of energy have reduced the gas power industry, which is the main consumer of gas in many countries. Weak economic growth increased the problems of the gas market. The demand has increased by four per cent to the previous year in 2015, but it future growth is likely to be weak, “- said the agency
production in the European gas producers fell more than the demand, because the additional production volumes in Norway can not compensate for the significant decrease in production in the UK and more recently. in the Netherlands.
Trying to drilling for shale gas in some countries of Eastern Europe did not produce results. While some European countries banned the use of hydraulic fracturing technology for shale gas, other states have not yet found a commercially significant reserves of shale gas on the background of public protests increase the use of hydraulic fracturing in Europe.
Fitch considers the threat from new pipeline supplies gas to Europe from Azerbaijan and Iran as rather limited in the medium term. While both Israel and Egypt have ambitious gas program, they are unlikely to become major exporters of gas in the medium term due to the lack of history of production in the developed gas assets and the growth of domestic demand, which is necessary to meet these countries before exporting gas.
LNG market is likely to still be experiencing oversupply by 2021, as put into operation more plants for its production, particularly in the United States and Australia. The growth in demand slowed down in 2014-2015, particularly in the Asia-Pacific region.
“We believe that competition among gas suppliers in Europe is likely to intensify, especially between the Russian pipeline gas and . LNG is good news for gas consumers, but bad for producers as the low gas prices are likely to continue, “- said in a Fitch survey
.” Gazprom “may lose some market share or profit margins in Europe in the medium term, however, the severity of the loss will depend on how the company is ready to meet the requirements of European consumers. Low costs of production and transportation from “Gazprom”, which is estimated at $ 3 per 1 million the BTU, and the substantial unused capacity in gas production will help him cope with the competition, it is believed the agency analysts.
“We expect that “Gazprom” will retaliate by further withdrawal from the binding gas prices to oil products prices, reduce the volume of deliveries on a “take-or-pay” and the rejection of restrictions on the resale of gas, “- said Fitch report
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