The Price American-Russian Price War for Natural Gas

A very interesting article by Foreign Affairs, about whether there will be an American-Russian price war over natural gas. See “A U.S. Gas War With Russia”?, May 2016.

In April 2016, the first shipment of American LNG arrived to Europe, and many analysts started talking about a price war between Russia’s Gazprom and the American energy companies. These analysts expect the American LNG shipments to Europe to push Gazprom towards lower gas prices, and also to reduce the Russian geopolitical might over Europe, since the American gas will reduce European dependency on Russian gas. Europe, together with Turkey, consume approximately 450 billion cubic meters of natural gas per year (2015), and Russia supplies approximately 1/3 of it, and earns 42 billion dollars (2015).

According to Foreign Affairs, the American LNG shipments to Europe will have a more ambiguous effect on Russia. The American companies will be able to ship to Europe a maximum of 80 billion cubic meters of LNG per year by 2020. But at the same time the European production is falling by 10 billion cubic meters per year i.e. Norway, Netherlands, England. Therefore a part of the American LNG, if it does indeed reach Europe, will only cover a part of the falling European production.

The Foreign Affairs article also mentions Norway and Algeria, who are the second and third largest suppliers of natural gas to Europe. The American LNG will reach the western coasts of Europe, and it will more likely hurt Norwegian and Algerian exports to Europe than the Russian ones. However nobody talks about a price war between American, Norwegian and Algerian natural gas, but they only talk about a price war between American and Russian natural gas.

Map

The Foreign Affairs article also mentions Qatar, because the European Union already had access to plenty of liquefied natural gas (LNG) from Qatar. Qatar has significantly increased its exports of LNG to Europe during the last few years, and therefore the American shipments to Europe could hurt the Qatari LNG exports to Europe. Remember that the Qatari and Iranian state owned media passionately supported Bernie Sanders in United States. Bernie Sanders wants to ban the American oil and gas production. See “The Financing of Hollywood’s Socialist Propaganda”.

https://iakal.wordpress.com/2016/05/12/the-financing-of-hollywoods-socialist-propaganda/

Moreover, the producers of natural gas in United States are private investors and do not care about geopolitics, but about where they can get higher prices. And they might get higher prices in countries that do not have access to pipelines of natural gas i.e. Japan, South Korea, Taiwan etc. Japan, South Korea and Taiwan have huge economies, and do not have access to pipeline networks, and they are the largest, the second largest, and the third largest importers of LNG respectively. See for example the figures for 2010.

Largest LNG Importers

http://www.rba.gov.au/publications/bulletin/2011/sep/images/graph-0911-3-05.gif

In 2015 Japan was the third largest economy in the world, South Korea was the 11^th largest, and Taiwan was the 22^nd largest economy in the world according to GDP. Therefore they all have huge needs for oil and natural gas, especially after the nuclear accident of Japan in 2011 (Fukushima), which made everyone more reluctant towards nuclear energy.

These countries appreciate LNG more than the Europeans, because the European have access to pipeline networks from Russia, Algeria and Norway, and they might be willing to pay for the American LNG higher prices than the Europeans, and therefore nobody can say for sure how much of the 80 billion cubic meters of the American natural gas will reach Europe.

Also note that Qatar, Indonesia and Malaysia, all Muslim countries, are among the largest exporters of LNG, and they mainly export to Japan, South Korea, Taiwan, China and India, and they see the American LNG exports as a very big threat for their economies. At the following Statista diagram you can see that Qatar is the largest LNG exporter in the world, and Malaysia is the second (2014).  If you have read the link I provided above about the financing of Hollyhood’s socialist propaganda, you have already read about Malaysia’s financing of socialist propaganda in United States i.e. The Wolf of Wall Street.

Top LNG Exporters (2014)

http://www.statista.com/statistics/274528/major-exporting-countries-of-lng/

Top LNG Exporters (2010)

https://oilandgaslogistics.files.wordpress.com/2013/07/lng-exporters.png

Qatari LNG Exports

http://www.eia.gov/beta/international/analysis.cfm?iso=QAT

Indonesian LNG Exports

http://drg.blob.core.windows.net/bunkerpricebody/images/stories/General_photos/111aaalng_exports_destination.png

At the following map you can see the global natural gas market. With circles you can see the main country exports. The blue part refers to the exports by pipelines, and the green part to LNG exports. The bars show the country imports, and the blue parts refer to imports by pipelines, and the green parts to LNG imports. Some countries have both exports (circles) and imports (bars).

http://sputniknews.com/infographics/20100426/158748785.html

See also “The Map of Natural Gas”

https://iakal.wordpress.com/2016/01/14/the-map-of-the-natural-gas/

and “The Map of War”

https://iakal.wordpress.com/2016/01/14/the-map-of-war/

The Foreign Affairs also mentions Australia, which will significantly increase her LNG production in the next few years, and she will probably become the top LNG exporter in the world, and that’s more important for LNG prices than whether the American LNG will be sold to Europe or somewhere else. Note that Muslim oil and gas exporters who are threatened by the Australian production are financing socialists in Australia, in order to flood the country with Muslim immigrants who can sabotage the Australian production with terrorist attacks. For the time being Australia has managed to defend the socialist propaganda and maintain a hard line towards immigrants who reach Australia through Indonesia, Malaysia etc. See for example Reuters “Australia reaffirms hard-line immigration policy”, May 2016.

Map Australia – Indonesia - Malaysia

I agree 100% per cent with the Foreign Affairs observations, and I do not think that the main thing of American LNG exports will be an American- Russian price war in Europe. The main war the Americans will have to fight will be domestically, because Iran, the Arabs and Russia will support American socialists, in order to use them as a fifth column in the United States and jeopardize the American economy and society.

On the other hand the Russians will not be happy to see the American LNG arriving to Europe. It will be one more trouble for the Russians, even if it is not the main one.

Articles

“A U.S. Gas War With Russia”?, May 2016

1^st Paragraph

 April 21, the first Europe-bound shipment of U.S. liquefied natural gas (LNG) left the Gulf of Mexico and crossed the Atlantic, a move that has been widely regarded as the first step in an impending gas war between the United States and Russia. As the theory goes, Russia has a grip on the European gas market, which it uses to bully its close neighbors and shush any major European states that push back on its geopolitical ambitions. U.S. LNG, it follows, will break Russia’s stranglehold. It is a cheaper and more reliable alternative. In turn, Russia will either lose market share or compete by lowering its prices. But either way, Europe wins, economically and geopolitically.

3^rd Paragraph

By 2020, the United States could be sending roughly 80 billion cubic meters of LNG to Europe a year—about two-thirds of the volume that Russia exported to Europe in 2015 and just under a third of Europe’s entire gas consumption, which is 400 billion cubic meters per year (450 billion cubic meters, if one includes Turkey). It is no wonder that conflict seems imminent: if such a large share of U.S. LNG were to land in Europe, Russia would get pushed out of the market and lose a large chunk of the $42 billion it earned by exporting pipeline gas in 2015.

8^th Paragraph

On the supply side, Norway is the second-largest provider of gas after Russia. Algeria is third, although its market share is shrinking. This makes these two countries important players, at least for European countries on the coast, which have direct access to seaborne LNG. These coastal European countries are also where U.S. LNG is likely to land since the ability to move gas further inland is often limited by infrastructure and other obstacles. And yet no one is talking about a looming price war between the United States and Norway or Algeria. That’s not as geopolitically exciting, even though it is far likelier to happen: U.S. LNG will compete in markets where Norway and Algeria are often larger players than Russia. Norway’s exports to Europe have risen in recent years, but Algeria’s have declined substantially. How these two countries react to the changing market environment in Europe will matter a great deal.

https://www.foreignaffairs.com/articles/united-states/2016-05-15/us-gas-war-russia?cid=nlc-fatoday-20160516&sp_mid=51385877&sp_rid=aWFrb3ZvczEwMDBAeWFob28uZ3IS1&spMailingID=51385877&spUserID=MTA3MTc0NjI3NDAxS0&spJobID=921992339&spReportId=OTIxOTkyMzM5S0

“Australia reaffirms hard-line immigration policy”, May 2016

http://www.reuters.com/article/us-australia-immigration-idUSKCN0Y508H?feedType=RSS&feedName=worldNews