The struggle against Russia has turned into a struggle against gas
By Vestnik Kavkaza
According to the analytical center of the multinational oil and gas company BP, Europe's dependence on gas imports will increase to 71% in 2035. In December 2014 Russia rejected construction of the South Stream pipeline bypassing Ukraine due to the resistance of the European Commission. It has declared the construction of a pipeline under the Black Sea. The Foreign Ministers of Greece, Serbia, Macedonia, Hungary and Turkey have already confirmed their participation in the construction.
Alexey Grivach, Deputy Director General for the gas problem in the National Energy Security Fund, thinks that “there is a certain political purpose, as Russian gas plays a very important role in the European market. We should note the failure of the systemic methods that have been used by the regulators in order to reduce the role of Russian gas in the European market. They have brought the opposite result. Despite a significant reduction of the consumed volume of gas in the EU, the share of Russian gas has increased there. The so-called alternative suppliers left the market more quickly, because the struggle against Russia turned into a struggle against gas. It led to the following situation: the other players were not in interested in continuing to work on those terms.”
Moreover, Grivach believes that “in recent years, LNG suppliers have redirected the volumes of liquefied natural gas to other premium markets. Now the situation has improved regarding prices. A mass influx of LNG to Europe has not been observed. And it is likely it will not happen. Because LNG is an Asian story. They are the market makers here, and Europe can only be guided by those surpluses when they are not in demand in Asia.”
There are three main sources of supply of pipeline gas to Europe. They are Russia, Norway and North Africa. According to Grivach’s assessments, “Norway will probably reduce the volumes. Besides, Norway and Russia are tied with huge investments for maintenance and development of production. According to this, they cannot make investment decisions based on the gas market, which is in a depressed condition.”
As for North Africa, it works with two markets only: Italy and Spain. Moreover, its volumes have significantly reduced in recent years.
Alexei Grivach is sure that neither Azerbaijani nor Turkmen gas is able to substitute for Russian supplies. As for Iranian natural gas, the expert says: “They took Iran from the drawer, their final hope. They shook off the dust and said, "We are going to stake on Iran." The second time it is a farce. The farce is that Iran understands very well the nature of this situation. Nobody, except them, relies on Iran as a strategic partner of the West. It means that it cannot make a strategic stake. Certainly, they will try to use this in their interests, but it is impossible say that Iran can strategically replace Russian gas on the European market.”