Oil prices extended losses on…
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Christof Rühl, chief economist and vice president at British Petroleum Group (BP) has just unveiled the 2013 edition of the Statistical Review of World Energy, in which it is noted that Norway, for the first time ever, overtook Russia as the largest supplier of natural gas to the EU in 2012.
The review highlighted that in the past 10 years there have been two major trends; the boom in shale gas production in the US as a result of fracking technology, and the increased trade of liquefied natural gas (LNG) around the world.
EurActiv.com wrote that, “the oversupply of gas in the US has been so high, according to the BP economist, that exports to Mexico by pipeline or LNG exports had not been sufficient to absorb it. He said that the only sector which was big and flexible enough to absorb the oversupply of gas was the power sector. However, this sector required that prices for gas be so low that they could compete with coal.”
Related article: Behind the Numbers in the Surging Global LNG Market
The opposite effect has occurred in the EU. High gas prices there, coupled with cheap, unwanted coal, from the US, means that coal is starting to become a more attractive prospect to burn in power stations. Europe has not competed much for LNG on the international market, and imports fell by 25%.
Of the natural gas that was imported, Russian gas prices are still tied to oil prices (which remain high), whereas Norway’s gas prices left this system of index and are therefore lower. Norway benefitted by seeing exports increase by 12%, whereas Russian exports fell by 10%.
By. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com