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Russia’s Gazprom Aims To Boost Its 35% Gas Market Share In Europe

Gazprom

Russia’s gas giant Gazprom aims to further increase its 35-percent market share in Europe, amid higher natural gas demand and expected lower production at key western European natural gas producers, according to a senior Gazprom manager.

The Russian company sees opportunities to lift its market share in Europe even more amid an expected decline in production in the North Sea and the planned shutdown of a huge gas field in the Netherlands, Reuters quoted Elena Burmistrova, Director General of Gazprom Export, as saying at a recent industry event.

After years of debates and measures to curb production at the Groningen gas field, the Dutch government decided in March last year that output at Groningen would be terminated by 2030, with a reduction by two-thirds until 2021-2022 and another cut after that. The authorities have already limited production from the field because of the earthquakes it causes, but they decided last year that the risks and costs were no longer acceptable.

Gazprom’s preliminary estimates show that the company’s share on the European market was 34 percent in 2017, while the share in 2018 could have hit 35 percent, Burmistrova said in remarks published by Reuters on Wednesday.

With North Sea production gradually falling, “the space for Russian gas is being freed up,” the manager said.

Gazprom is not setting targets for its market share in Europe as it doesn’t want to sound too “aggressive,” according to Burmistrova.

Several European countries, including the Baltic states and Poland, as well as the European Union (EU), have expressed concern about Russia using gas sales and its gas monopoly Gazprom as a political tool.

Burmistrova’s take is that Gazprom has proven it is a reliable natural gas supplier and it “will always be competitive against American LNG,” to which counties like Poland and Lithuania look for reducing their dependence on Russian supplies.

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on February 07 2019 said:
    Like any astute and far-sighted businessman, Gazprom will always look for opportunities to expand both its business and return on investments worldwide. Therefore, expanding an already-dominant position in the European Union’s (EU’s) gas market should be no exception. It will be taking advantage of higher natural gas demand in the EU and expected lower North Sea gas production particularly with the planned shutdown of the Groningen gas field in the Netherlands by 2030.

    As a result, Gazprom’s share of the EU gas market could rise higher than the current 35%. Moreover, Russia’s presence in the EU gas market will be further enhanced with the completion by the end of this year of Nord Stream 2 and Turk Stream gas pipelines which will bring 110 and 16 billion per year of Russian gas supplies under the Baltic Sea and the Black Sea respectively to the EU.

    Germany was adamant in its support of the project because it is on the way to phasing out coal-fired generation by 2038 with the aim of cutting carbon emissions and also phasing out nuclear electricity by 2022.

    Germany considers Nord Stream 2 first and foremost an economic project which will bring uninterrupted and cheap Russian gas supplies to Germany and the EU thus ensuring energy security to the whole of the EU.

    While Germany will mostly seek to replace coal and nuclear energy with renewables, it will still need a lot of gas supplies as it can’t for the foreseeable future run on renewables only.

    Last year, renewable energy accounted for more than 40% of Germany’s power generation beating coal in the process.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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