Particularities of Russian energy sector

Nowadays there are following world gas market tendencies:

1. Decreasing of Russian gas demand in Europe. It is well known that nowdays The USA has activated the shale gas production. The result of this activation is LNG (Liquefied natural gas) purchase decreasing by The USA and LNG moving to Europe. The result of this moving is decreasing of Russian gas demand in Europe. The Russian portion on the European gas market decreased from 25% to 22%. However, European LNG import generally increased to up 22%.
2. Gas average price decreasing. A) Because of shale gas production increasing and LNG delivery to Europe the gas average price steadily decreases in Europe. At the same time, Qatar gas price sometimes 3 times less than Russian price. The average Russian gas price in 2012 in Europe was 418,2 $/thousand cubic metres. B) Great investments of different countries in LNG plants. According BP forecasts world LNG production will be increased twice in 2020. This is the other factor of gas price decreasing. C) The next factor which influences on gas price decreasing is ageing of long term gas contracts system (long term gas contracts were traditional method of Russian gas sales). Economic crisis motivated Europeans to use more exchange trade (and gas prices in exchange trade 25% less than prices in contracts).
   
3. Growing of gas, gas condensate and helium production in Russia thanks to new big minefields exploitation in Eastern Siberia, Yamal, Far East. Because of 2 previous factors this growing gas proposal won’t be guaranteed by demand in full measure and therefore, it will be necessary to create new additional large gas storage in Russia.
4. There is intention of some countries (such as Belgium, Italy, Germany, Switzerland, Peru) gradually to reduce nuclear energy using. Conversations about this matter especially activated after Fukushima disaster. Indeed, if nuclear energy reduces than the Russian gas demand will grow. But nowdays there isn’t serious nuclear energy reducing, therefore this factor is very illusive.

Everything abovementioned forced Gazprom to reduce its gas prices in European market in 2012.

More detailed information on this matter is contained in the Lecture 8.