American LNG does not need Gazprom in Europe

Negotiations on the peaceful settlement of the conflict on Ukraine has led to discussions in Europe to resume large—scale imports of Russian gas and the possible participation of the American side in the transportation of fuel - via Nord Streams and through Ukraine. Experts, however, note that even a partial increase in supplies will lead to lower prices, which does not meet the strategy of American LNG, which is based on the problems of Russian gas companies.

After the peaceful settlement of the conflict on The supply of pipeline Russian gas to Ukraine could grow and amount to 60-70 billion cubic meters a year. This was told to Reuters by the heads of large European trading companies. At the same time, the German petrochemical industry informed the agency that supplies are needed now to make production profitable and enterprises competitive on the world market.

At the same time, the market is discussing the participation of the American side in the negotiations on Nord Streams, and in the draft agreement on the joint development of Ukraine's resources between Washington and Kiev, the American side also indicated the Ukrainian transit of Russian gas.

All this has given rise to a lot of discussions about the resumption of Gazprom's large-scale exports to Europe. However, experts tend to doubt.

The estimated 60-70 billion cubic meters of Russian gas per year is only a part of Gazprom's past supplies to the EU. In the best years, they reached 150 billion cubic meters. At the same time, Gazprom has never offered cheap gas to the EU. Its price in most long-term contracts is tied to quotations on European stock exchanges and may be lower than that of competitors. However, the increase in volumes themselves may be enough to change the situation in the European market. Now gas quotes in the countries The EU is at a level above $ 400 per thousand cubic meters. Europe needs gas at a price of $ 200-$300.

Alexey Grivach, Deputy director of the National Energy Security Fund (NWF), believes that for a stable price in the region of $ 200-$ 300, it is necessary to restore a significant part of the volumes and 70 billion cubic meters will not be enough if we talk about restoring the energy-intensive EU industry and continuing the policy of abandoning coal in generation.

Finam analyst Sergey Kaufman, in turn, notes that many projects are expected to be launched in Qatar and the USA in the coming years.

"If we start restoring Gazprom's exports to 70 billion cubic meters (now about 18-19 billion cubic meters per year go through the Turkish Stream branch leading to Europe), then the European gas market will really become sharply surplus. In the coming years, the United States and Qatar plans to significantly increase LNG production and some of these volumes are aimed at the newly liberated EU market. In such a situation, a price reduction to $ 200 per thousand cubic meters would be a likely scenario," says Sergey Kaufman.

According to him, $ 200 per thousand cubic meters allow existing LNG projects in the United States to remain profitable, however, a level of at least $ 250-300 is required for the construction of new plants, assuming market pricing.

"A significant part of American LNG is sold with reference to prices on the Henry Hub exchange, which allows you to have a fixed margin and to a lesser extent depend on market conditions in Europe," says the analyst of FG Finam.

Alexey Grivach, Deputy Director of FNEB, notes that the cost of American LNG supplies at current prices in the United States is in the region of $ 300-350 dollars.

"Therefore, all sorts of surprises are possible with the availability of gas with a sharp drop in prices, which will eventually turn into a new growth," the expert says. In his opinion, for a stable market, supplies via the pipeline in the "base" are needed and, more importantly, flexible supplies via gas pipelines, and only Russia can provide them.

The scenario of a partial return of large volumes of Russian gas and lower prices in the EU is one of the main reasons why the easing of US sanctions against Russian gas companies is unlikely even in the event of some warming in relations between the two countries, Sergey Kaufman believes.

"The current strategy of American LNG producers is largely based on the problems of Russian gas, and therefore the easing of sanctions against Russian projects would be a shot in the foot for the United States," says the analyst of FG Finam.

According to him, statements about the import of 60-70 billion cubic meters of Russian gas in the event of peace on Ukraine came from top managers of French oil and gas companies TotalEnergies and Engie.

"TotalEnergies is one of the few companies that has left Russian assets (shares in Novatek and its projects), that is, it cannot be said that it is an impartial person. In addition, France as a whole is still one of the largest importers of Russian LNG. At the same time, representatives of the governments of leading European countries have not softened the rhetoric regarding Russian gas. In other words, inside There are some contradictions between business and government representatives in the EU," adds Sergey Kaufman.

In this situation, negotiations on the future of Nord Streams and the US desire to take control of Ukrainian transit may be a trade about the post-war structure.

"This is part of the negotiation process," Alexei Grivach believes.