FX.co ★ Power of Siberia 2 to impact European gas market

Power of Siberia 2 to impact European gas market

Power of Siberia 2 to impact European gas market

According to Fitch Ratings, Europe may soon face a shortage of natural gas if Russian energy giant Gazprom ramps up its supply to China via the Power of Siberia 2 pipeline. The rating agency believes that Gazprom will continue to deliver gas to Europe under long-term contracts. However, the spot gas sales will be considerably reduced. This can result in Gazprom losing its status as an ultimate gas supplier in Europe. Instead, Russia plans to increase its gas exports to China. All this may lead to a deficit in the European gas market. The current demand for gas in Europe will be covered by LNG, but the EU will now have to compete with Asia for it. In case Russian exports to China grow significantly, Europe may fail to get additional LNG volumes. Experts estimate that the gas shortage will hit the European region in the next 5-10 years after Power of Siberia 2 is launched. Later on, the situation may stabilize as Europe will reduce its dependence on gas in line with its transition to green energy. Earlier, the eurozone countries committed to moving to clean energy sources. The Power of Siberia 2 pipeline is designed to transport Russian gas to China via Mongolia. In Russia, the pipeline will run through the territory of Krasnoyarsk, Irkutsk Region, Buryatia, and Transbaikal. Its export capacity is estimated to be 50 billion cubic meters per year. Gazprom plans to launch the pipeline by 2024 and says it will be as powerful as North Stream 2.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade
Go to the articles list Open trading account