US Battles Russia for European LNG Market
As the U.S. prepares to enter the European gas markets with its first delivery of liquefied natural gas, Norway and Russia are expected to increase production to lower prices and make exporting less desirable to the U.S., reports Daily Sabah.
Europe will become the third continental customer for U.S. LNG with a delivery set to arrive in Portugal this week, while the U.S. is expected to increase global LNG supplies by 15-20 percent next year.
Cheniere Energy’s newly completed Sabine Pass facility on the U.S. Gulf Coast recently sent a shipment of American liquefied natural gas, which should arrive in Portugal within a few days.
However, Russia's gas giant, Gazprom, whose biggest customers are in European countries, along with Norway, the second biggest supplier of gas to Europe after Russia, are expected to step up their efforts to prevent losing market share to U.S. gas.
Appearance of the US liquefied natural gas (LNG) in Europe may prompt Russian gas producers to adopt a Saudi-style behavior model and keep gas production maximum high in order to push out marginal producers, says a report in Sputnik.
Most impact from the US LNG is likely to be felt in Europe in 2018 and onward, when US producers might have captured a significant market share.
The US government is unlikely to offer subsidies to American companies exporting liquefied natural gas (LNG) to European countries that are dependent on Russian energy sources.
Many energy experts do not anticipate US LNG will be competitive with Russian pipeline resources. As a result, US producers are likely to enter markets that support higher prices.
European LNG demand is rising as domestic natural gas production is falling. Europe’s LNG imports climbed by 16 percent in 2015 compared to a year earlier.
