Even if US Sells LNG For Free, It Can’t Replace Russia in Europe: Moscow

In the latest round of saber-rattling between Russian natural gas suppliers and their American counterparts, Vladimir Chizhov, Moscow’s envoy to the European Union, has said the United States could not replace Russian natural gas supplies to Europe, even if suppliers gave it away for free.

"[The] policy of imposing US LNG contradicts objective market laws," the diplomat stressed, as reported by Russian news outlets.

The problem relates to U.S. gas production capacity, according to the Russian official, who spoke on the topic during a radio interview.

"Even if Americans supplied liquefied gas to Europe free of charge, they simply would not have had enough capabilities to replace the Russian supplies," Chizhov said.

A shortage of LNG terminals in the U.S., as well as low gas production and tanker count added to the Russian official’s analysis.

"According to current estimates, the price for 1,000 cubic meters of US LNG on the European market will be about $250. This is unprofitable for Europeans, since Russian gas costs about half as much, but it is also unprofitable for American businesses, because the United States can sell the same amount of gas in Asia and Latin America for over $300," Chizhov said.

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Russia is in the process of gaining EU approval to build the Nord Stream 2 pipeline, which would bypass Ukraine to supply energy directly to Germany. But Russia has a different take on the issue:

"I would not assert that [the construction of gas pipelines] will necessarily lead to a complete cessation of Ukrainian transit because there are countries that, one way or another, depend on this transit, for example, Moldova. It does not have other methods to get gas, except through Ukraine, and it will not have any alternatives in the foreseeable future," Chizhov said.

By Zainab Calcuttawala for Oilprice.com

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