us lng vs russian pipe gas: impact on prices · 2017-11-14 · amme us lng vs russian pipe gas:...
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US LNG vs Russian pipe gas: impact on pricesDr Thierry Bros
Energetika – St Petersburg – 9 Nov. 17
Senior Research Fellow
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Facts vs Fake news
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Facts Fake News
Production Russian gas: the least costly
US LNG: more costly than Russian gas
Prices Always linked to the cost of marginal unit
Nord Stream 1 Cheaper than transiting via Ukraine
Lower European prices in 2011
US LNG Lower European prices in 2016
Nord Stream 2 Cheaper than transiting via Ukraine
Higher market share for Gazprom
Higher market power for Gazprom
Lower prices?
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Europe import needs at record high
Source: IEA, JODI, thierrybros.com
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0
100
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400
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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
bcm
Netherlands production UK production
Other Europe production Europe consumption
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Gazprom doesn’t flood EU
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Source: Gazprom, Entsog, thierrybros.com
02468
1012141618
bcm
Via Ukraine Via Belarus Direct
Max effective Max theory
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LNG, pipe imports & prices
Source: thierrybros.com, IEA, Argus
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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
€/M
Wh
bcm
LNG net imports Norway pipe to Europe Russia pipe to Europe (net) TTF (€/MWh)
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US LNG vs Russian pipe - Prices
Source: Argus, thierrybros.com
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Oct 11 Oct 12 Oct 13 Oct 14 Oct 15 Oct 16 Oct 17
$/M
Btu
HH Full cost of US LNG Price war to shut in US LNG TTF
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Gazprom exports and Europe dependency
0%
20%
40%
60%
80%
100%
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5
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Gazprom's exports (bcm) Russian dependency (%)
EU-28 dependency (%) EU-27 dependency (%)
7Source: Gazprom Export, thierrybros.com
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Brexit’s impact on foreign dependency
0%
10%
20%
30%
40%
50%
60%
70%
80%
EU-28 UK EU-27
Total foreign dependency pre and post-Brexit
2014 2015 2016
Source: JODI, thierrybros.com (Norway is foreign for all)
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Can this impact
perceived SoS?
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3 options for the Norway/Russiaduopoly to manage prices
• Tightening supply - Increasing producers’ rent
• Demand destruction but no impact on exports
• 2012-2013
• Prompted new FIDs
High7$/Mbtu min
• Swinging supply
• Since 2014
• Most profitable in the long term
Med.c.5.5$/Mbtu
• Use of spare capacity
• Price war to shut in US LNG
• Lower revenues
• Can be done sporadically
Low4.5$/Mbtu max
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Thank you
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Source: Gazprom, thierrybros.com
Twitter: @thierry_bros