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Sunday, February 18, 2018

The US policy on “saving Europe” from a Russian fuel at the trump will not change

American energy will help Europe to avoid becoming “hostage to the sole and dominant resource,” said the candidate for the post of Secretary of state and former head of ExxonMobil Rex Tillerson. This, of course, about the disposal of the EU on Russian fuel. USA for three years, “saving” Europe from Russian oil and gas. What changed during this time?

At a hearing of the Senate candidate for the post of Secretary of state and former head of ExxonMobil Rex Tillerson was asked to comment on the construction of the pipeline “Nord stream – 2” in Germany, bypassing Ukraine and dependence of the EU on Russia.

“The price of LNG supply from the US is much higher and competitive it would become, if only America will learn its liquefied natural gas to teleport”

Answering the question, Tillerson said that the supply of fuel from “stable countries” like the U.S., will not allow States to become “hostages of the sole or dominant resource.” “It is important that we watch closely, and when the balance is disturbed,” said he. The most “significant” response to such threats Tillerson believes the development of the United States “natural resources”.

The United States has long say that Europe should get rid of “dependence” on Russian gas. Whether Gazprom and the Russian oil exporters be aware of their main market, and Russia – to wait for the loss of oil revenues?

Most experts believe that Rex Tillerson as a former head of ExxonMobil just can not understand the impossibility of their statements. At least three to five years, Russia is unlikely to fear competition in Europe from American energy. But as a candidate for state secretaries, Rex Tillerson just couldn’t give any answer to such questions. “I’m sure he just said what was expected of him in the Senate, this is purely political rhetoric in order to complete the approval process,” says chief analyst GK TeleTrade Peter Pushkarev.

In fact, the United States is already supplying oil and gas to several European countries. That’s just their volumes are insignificant. Thus, the American oil goes to the UK, the Netherlands and Italy, but the total volume of supply in Europe does not exceed 170 thousand barrels per day. That’s nothing, considering that the U.S. produces about 9 million barrels per day plus import as much or slightly less than one million barrels per day depending on price.

“The oil still in the large quantities needed by the United States, much of it imported. In these circumstances, and in the apparent reduction of interest in shale extraction because of the “price war” Napoleon’s plans for us oil exports do not look too relevant,” – said Pushkarev. To be serious exporters, the Americans need to begin to reach self-sufficiency in oil. Such a goal for the coming years is real for US. While they may talk only about a small volume of crude oil and especially oil products, including to Europe.

In real life you can talk about these goals in the coming years, as the full supply of oil the United States, small additional volumes of crude oil and especially processing into refined product supplies to Europe. “Here the United States, of course, will be some competition between Russia and countries of the Gulf, but their main aim is unlikely to be Europe. Pushkarev believes that the widespread development of shale technologies in the near future is hardly possible, therefore, the United States will expand their markets only in the case if active are to develop alternative energy, releasing quantities of oil for export.

“Even the prices of 60-65 dollars per barrel, making such projects is extremely marginal. Given the events of the last three years around the fall of oil prices, when many elementary shale companies went bankrupt and others were on the brink of survival, want to engage in this business is now diminished. Many of them did the business of lending money and at zero interest rates, but now the fed has changed policy, beginning a cycle of gradual increase in interest rates. Not by chance the number of drilling rigs dropped three times, and even after oil has risen in price, has resumed from the suspended plants barely 15%,” says Pushkarev. Those who have money, prefer not to take risks and not invest in oil production and in other industries – or simply invest in a growing stock market.

Verdict expert: the oil can speak about a moderate expansion in Europe for five to seven years. Although this would not mean the failure of the Russian oil. Otherwise, this time will be enough for Russia to painlessly redirect their oil flows from West to East.

But the U.S. plans for expansion in the gas market in Europe – it’s all pure utopia, said Pushkarev. Actually, the US is now likely to be on the forefront is not a geopolitical problem displace Gazprom from the European market. They just have to unload their own internal market for gas, where for the last years formed the oversupply. It puts the gas industry on the brink of profitability.

For this reason, the United States has begun supplying LNG to Europe. The first tanker with LNG to the us was sent in April last year. The American company has even signed with the European (Royal Dutch Shell and BG Group) contracts for the supply of liquefied gas. However, Gazprom this parish didn’t even notice. Despite the growth in demand for natural gas in Europe, its delivery of the USA did not become widespread. No competition with cheap pipeline gas from Russia – and not even in sight.

Gazprom at the end of 2016 have set a new record for deliveries of blue fuel to Europe, increasing its share in the European market with a 31% to 33%. Europeans still prefer to buy cheaper Russian pipeline gas. By the way, note that consider Russia as a monopoly, when it occupies only a third of the European gas market, weird. No one talks about dominance in Europe, Norwegian, Arab or African gas.

“The price of LNG supply from the US is much higher and competitive it would become, if only America will learn its liquefied natural gas to teleport. Even similar supplies from the Middle East or Yamal will win on price if before discussing these questions generally it comes”, – said Petr Pushkarev. Us LNG given the need for its liquefaction, transportation, unloading and regasification costs on 100-150 dollars more expensive than pipeline gas, indicates Yakovenko.

But the point here is not just the price. “To start supplying LNG to Europe, it is necessary to create not only a fleet of tankers but also a tremendous capacity for storage and regasification of liquefied natural gas to the EU, to re-equip and modernize the ports and to establish system timing. It is huge funds, which are unlikely to be provided by the government of the United States and European companies,” says Kirill Yakovenko from “ALOR Broker”.

The business is also unlikely. In the U.S. gas market works not a one company monopoly, as in Russia, and dozens of small. “To develop the supply chain of LNG in Europe alone, simply no, and their Union is hampered by the competition for a place in the promising new market,” – says Yakovenko.

Until recently, the gas transportation infrastructure of the United States was focused exclusively in the Gulf of Mexico. There are the main LNG terminals, and they worked on imports and not on exports. So it takes time to rebuild infrastructure from North to South. But it will take at least another three to four years, said Azret Guliyev from IFK “solid”.

However, even if investments are to be constructed the infrastructure, American gas companies will be more profitable to send the gas to Europe and to Asia. In Europe, natural gas will have to sell at a price below cost in order to somehow compete with Gazprom, but in Asia pipeline gas in short supply, so the purchase price is significantly higher indicates Yakovenko. Business, of course, will choose the market on which you will be able to earn more and not work at a loss for the sake of geopolitical ambitions of someone in power.

And European authorities, by the way, is well aware. That is why they have made last year a big step towards Gazprom approved the pumping of additional volumes of gas through the OPAL. Gazprom began to put record after record on pumping of fuel through the Nord stream and OPAL. This gives grounds to say that “Nord stream – 2” is an accomplished project.

“The Germans and Dutch, not too unceremoniously, shallow objection, even some EU countries on this issue, and even more won’t listen to political advice from overseas, and at what price they buy for the sake of imaginary “energy security”, but in reality for the sake of the income of American companies. All really understand that talk about the threat of monopolization is pure politics, and the decisions here will dictate the economy. Europe has enough financial lost due to sanctions against Russia, which were introduced under US pressure, and gas it to any deliveries of liquefied natural gas across the ocean would not change,” – said Pushkarev.


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