Gazprom Exports to EU Hit Record

[Tomasz + 1,608]

On 6/20/2018 at 2:33 PM, Jan van Eck said:

You folks are overlooking the international marine shipping sector.  A huge amount of LNG tonnage has been ordered and will hit the water in 2019,  There is also QAatar as a major LNG exporter, and Libya is down there on the Southern European flank with a ton of gas (albeit politically unstable) and so is Algeria with its gas fields.  Can Europe operate without Russia?  Sure it can. Does it want to?  Only the countries of the former Soviet Bloc, those who lived under the heel of Stalin and are horrified at the prospect of another experience of a generation of oppression.  For the rest, specifically Germany and England, they seem oblivious to that risk.  

I predict LNG gas will be exported in large quantities to new terminals in both the Baltic and the Black Seas.  You will see Odessa become an import hub, together with the fore-port to Stettin. And US gas will be coming in, because the customers are out there.  Can Russia hold them back? Remembering that the current big pipelines run one through Belarus  (another dictatorship that will be on deck as a Putin location for some time still) and another through Ukraine (which is effectively getting shut down, if not already).  Russia need the routes through Turkey into the South of Europe, and the undersea Black Sea Route to the Western side of Istanbul, but that takes time.  Russia also need the second NordStream route, and that takes even more time. Can dumped gas through NordStream I hold off the Americans?  Probably not., 

I really don't think that Russia can afford to continue to give gas away.  Historically they have priced to market, charging whatever the market can bear. To try to hold off the competition by dropping price into the cellar is a losing strategy, as Russia seriously needs the income. Russia is a society with serious internal problems, and although Moscow can force the Russian people to continue to suffer, and live in privation, at some point even the fabled Russian ability to endure punishment and deprivation will run out.  It was exactly that scene that collapsed the old Soviet Union;  Ronald Reagan simply outspent them. 

Sorry Gazprom haters.One simple small economic problem + price. LNG is at least 30 % more expensive than russian gas.

Because Gazprom has a cost of production about 1 $ per mbbtu US shale about 2,5 $. Gazprom uses pipe and LNG need a complicated process to be available in Europe.

 

Lets see

Average cost of US shale gas in the future - lets say 3 $ on HH

Standard additional fee for Cheniere for exporting gas 15 % of that which means 0,5 $

Cost of  transport, gasification, regasification 4 $ (3,5-4,5) 

Cost of transporting gas to the port and from the port 0,5 $

 

So wee seen long-term marginal cost of US LNG to Europe at least 8 $ per mbbtu which means 288  $ per 1.000 $

Once more sorry Gazprom haters its just economy of LNG and economy of russian gas.

Simple matter of geology and also a geography I know you are angry but this is a fact. You can only blame God for this.

Edited June 22, 2018 by Tomasz

[jose chalhoub + 388]

I believe that this time the U.S. LNG and oil exports could become a threat not to Europe but to Asia or this is what Washington is trying to do and this should put Moscow in alert since asian markets are increasingly important for Russia in recent years. 

[DanilKa + 443]

On 6/23/2018 at 7:49 AM, jose chalhoub said:

I believe that this time the U.S. LNG and oil exports could become a threat not to Europe but to Asia or this is what Washington is trying to do and this should put Moscow in alert since asian markets are increasingly important for Russia in recent years. 

Sleep well, Jose. US export threat is greatly exaggerated, they remain net importer of crude and it will persist for a while. HH gas price is also likely to rise, making its liquification uneconomical (can’t complete with Qatar). 

Piped gas is cheaper, good point @Tomasz 

Edited June 24, 2018 by DanilKa

[jose chalhoub + 388]

Just now, DanilKa said:

Sleep well, Jose. US export threat is greatly exaggerated, they remain net importer of crude and it will persist for a while. HH has price is also likely to rise, making its liquification uneconomical (can’t complete with Qatar). 

Piped gas is cheaper, good point @Tomasz 

dont take it so seriously. and why not. U.S. exports could rise high, nobody knows exactly, unless you have accurate data.. 

[DanilKa + 443]

1 minute ago, jose chalhoub said:

dont take it so seriously. and why not. U.S. exports could rise high, nobody knows exactly, unless you have accurate data.. 

Difficult to make predictions, especially about the future:) (not me, Yogi Berra). 

I have a reasonable understanding of shale oil dynamics, gas is linked to it. Although once price increase, we may see resurgence of activity. Decline is also very dramatic there but it’s getting better with longer wells, more sand and managed cleanup.