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Norway overtakes Russia as Europe’s biggest gas supplier

Norway overtakes Russia as Europe’s biggest gas supplier thumbnail

Russia lost its position as the main supplier of gas to EU last year as Gazprom exports fell by 10% knocked down by coal and high prices.

High gas prices in the EU coupled with cheap coal from the US, have made coal a more attractive fuel for power stations, according a new energy report from BP. On average, generating power in Europe is 45% cheaper with coal than with gas, BP chief economist Christof  Rühl explains in the report. That’s why Europe did not compete for liquid natural gas (LNG) and its imports to Europe fell by 25%. EU imports from Gazprom also dropped by 10%, as Russia’s gas prices are tied to oil prices and therefore remained high, BP’s economist said.  Norway’s gas pricing is not pegged to oil and are therefore lower. Imports from Norway rose 12%, and 2012 became the first year when Norway sold more gas to the EU than Russia, Rühl said.

Gazprom CEO Aleksandr Medvedev circulated an email on June 24 in which he reacts to a Financial Times article which claims that the Russian gas monopoly is in decline and that it is losing its hold in the EU market.

“Recently, Gazprom Export set a new record in daily gas deliveries. We pumped 466 million cubic metres of gas to Europe in a single day, pushing existing pipeline capacities to their limits. And Gazprom posted a whopping $38bn profit in 2012. In challenging economic times this is hardly a sign of weakness,” quotes Medvedev.

Although Russia remains a key supplier to Europe, the country is also seeking to diversify export markets for its gas to the booming Asia Pacific Region betting on growing demand in emerging economies.

Just 7 percent of Russia’s gas exports were sold to Asian consumers last year, all in the form of LNG, from the Sakhalin II project, the Moscow Times reports.  But Russia’s gas exports to Asia will expand dramatically if the construction of two new LNG terminals goes ahead: Gazprom’s Vladivostok and Novatek’s Yamal projects. Rosneft also plans to build a terminal in Sakhalin. If these three projects are realized by 2020, Russia’s LNG capacity would increase from 10 million tons per year to about 45 million tons, equal to 18 percent of global LNG exports in 2012, according to the Moscow Times.

Globally gas consumption rose 2.2% faster in 2012 compared to a year earlier, but below the long-term average, according to BP’s energy report.  The growth is largely US-driven, as gas consumption in the world’s largest economy has increased more than in any other region of the world. At the same time, the EU and the former Soviet states have registered the largest regional declines in gas consumption, according to the report.


6 Comments on "Norway overtakes Russia as Europe’s biggest gas supplier"

  1. Plantagenet on Wed, 26th Jun 2013 10:18 pm 

    Its shameful that the EU is burning coal instead of clean NG. Coal produces much more CO2 then NG. It was bad enough when the EU was screwing over the Greeks and the Spainish and the Irish and the Portuguese to save a few Euros, but now they are screwing over every person on earth by screwing up the climate in order to save a few measly Euros.


  2. Kenz300 on Thu, 27th Jun 2013 12:01 am 

    Relying on one source of supply (Russia) is dangerous.

    There needs to be a diversity of energy types and sources for competition to work to bring down prices.

    Europe needs to keep investing in alternative energy sources like wind, wave enrgy and solar to increase their share of the energy mix. Once the investment is made there are no monthly fuel bills and no sudden increase in prices from a supplier. Much better choice for energy security and economic security.

  3. GregT on Thu, 27th Jun 2013 12:33 am 

    The world’s economies are winding down, and they will come to a grinding halt.

    Alternate energy sources will never do for us what fossil fuels have done. Not even close.

  4. BillT on Thu, 27th Jun 2013 4:57 am 

    Alternate sources will provide us with a 1900s lifestyle, maybe, but not the internet and all the other techie toys of today. They are products of oil, not renewables like muscle power and wood. We will be back to living on the daily energy from the sun as it was used for most of history.

  5. Arthur on Thu, 27th Jun 2013 6:52 am 

    Really Bill? In Germany it was anounced yesterday that postal organisations are going to create 20,000 new outlets. Reason: everybody is moving towards buying from the internet. This saves all these shopping trips in cars to malls and reduces the need to own a car in the first place. The entire system can be replaced with a new one where vans directly drive to these outlets, where customers can pick it up, by bicycle for instance. The act of buying can be done on a three watt, solar powered tablet. That’s progress in a resource depleted world.

  6. Arthur on Thu, 27th Jun 2013 7:04 am 

    Rear gard fight. Norway is going to be the pivot in the European supergrid. As I understand it, but data is somewhat conflicting, Europe has 18 days worth of overall electricity consumption stored in existing hydrobassins, first of all in Norway:

    At first sight that should be more than enough to buffer intermittent supply of wind and solar. All it takes is install pumps next to the generators in Norway, construct a few more subsea powercables, next to the existing ones and build small secondary basins where the generators and pumps are. All this planned and done as we speak.

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