Gazprom continues to strengthen its position in Europe

The Russian state gas company announced that in the last quarter of its gas sales to Europe rose again. This means that European importers of energy continue to increase their dependence on this gas giant.

For the first three months of this year, Gazprom’s sales increased 4.4% to $ 1.8 trillion — increasing demand for gas in Europe and the former Soviet Union.

Britain does not import gas directly from Russia, but the biggest European customers of Gazprom are located in Germany and the Netherlands — that is, in countries closely associated with the British gas transmission system two major pipelines.

The volume of Russian gas that the Kremlin-controlled company sold to Europe and some neighboring countries, increased in the first months of this year by 13% and amounted to 65.6 billion cubic meters.

According to the experts on the gas market, analytical company Icis, the volume of Russian gas to the European gas distribution network for isklucheniem the Baltic States, reached in the first quarter of 42.3 billion cubic meters. This is significantly more than 37 billion cubic meters, which were delivered in the first quarter of last year and 25.8 billion cubic meters supplied in the first months of 2015.

Export revenues of Gazprom in the first quarter began with a set by him in the first week of 2017 historical record. The sixth of January, when Europe was hit by a sudden cold, a gas giant sent to countries outside the former Soviet Union, an unprecedented number of gas — 615,5 million cubic meters.

The demand for Russian gas has increased partly due to the fact that the reserves of the North sea are being depleted, and gas is increasingly used for the production of electricity.

Britain stubbornly closes coal plants. As a result, the gas was again for her — after several years of growth in the use of coal is the main source of energy.

France also began to actively use natural gas, having made the decision to stop a number of nuclear reactors because of a defect, which was discovered in the widespread type of reactor.

According to experts at the European gas market from Icis HORSLEY Jake (Jake Horslen), increasing dependency of Europe on imports from Russia also contributes to the relatively low price of Russian gas.

“The price at which Gazprom sells gas to Europe, tied to price of oil products — usually with a time lag of six to nine months. This means that the efficiency of gas for European buyers often determined by the state of the oil market,” he says.

“In 2014, the price of oil is falling fast. In 2015, it has continued to decline. Did Gazprom’s gas is cheaper for many buyers. We saw that in 2016 consumers take more gas, since Russian gas has become much more competitive,” — said the expert.

Now Gazprom supplies a third of EU gas purchased. However, he plans to expand his influence, to build another big gas pipeline. Gazprom is going to use this controversial project called “Nord stream-2”, to send the gas to Germany bypassing Ukraine through the Baltic sea. This option seems the company is more preferable than having to negotiate with Kiev on terms for the transit of gas for many years and continues to worsen political tensions.

Critics accuse Russia is that with the new gas pipeline she wants to deprive Ukraine of its key source of revenue and weaken its political and economic point of view. However, Gazprom claims that the move is necessary to provide Europe with reliable gas supplies.

The volume of gas sold by Gazprom, the former Soviet republics, increased in the first quarter of the year is 13% (12.5 billion cubic meters). Domestic sales grew by 8% and reached 81.7 billion cubic meters.

“Gazprom is also experimenting with new ways of selling gas to Europe through auctions for the Eastern and Central European markets. This is another factor behind the growth of supply of [relevant regions]” — adds Horslen.