Gazprom warns Europe of gas shortage without increased Russian imports

2018-02-11 17:08:00 Viewpoint,  Company,  International,  Gas reuters.com

Europe will face a gas shortage and price spike as soon as the next decade if it doesn't decide quickly to boost imports from Russia as gas purchases from the United States or Qatar fail to match demand, Kremlin energy giant Gazprom told Reuters.


Gazprom's deputy head Alexander Medvedev said the company would have enough supplies for both Europe and Asia but it was time for Europe to decide where it should source gas as the continent's demand was rising and its production shrinking.


"Europe completely miscalculated when they assumed that they won't need much additional gas and if they need some it can be supplied from outside Russia," Medvedev, who looks after exports for the world's top gas producer and exporter, said.


Despite repeated warnings from Europe about an over-reliance on Russian gas, Gazprom's exports to the continent jumped 8% last year to an all-time high of 194 billion cubic meters on higher demand and lower prices. That gave the company a record European market share of 35%.


Medvedev said the share could rise above 40% as Europe's gas demand rises, Dutch and British production falls and Norway's output growth should slow after 2025. U.S. supplies will remain modest, expensive and would mainly go to Asia.


He added that even if Gazprom builds its two new pipelines to Europe on time - Nord Stream 2 under the Baltic Sea and Turkish Stream for Europe's south - it will not be enough to balance rising demand and shrinking supply.


"And LNG will not be able to cover that gap," he said, adding that U.S. supplies would remain modest and Qatar would probably send large volumes to premium Asian markets.


Qatar, the largest producer and exporter of liquefied natural gas, has announced plans to expand its annual LNG production to 100 million tonnes from the current 77 million.


Medvedev said Qatar was probably Gazprom's biggest competitor in terms of volume but that markets were growing so fast in China, India, Pakistan, Bangladesh and Vietnam that they would consume all new supply.


(Writing by Alex Guo   Editing by Tammy Yang)
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