Gazprom and Europe's gas problem

Energy & Commodities
  • The launch of the European Commission’s expected market abuse investigation against Russia’s Gazprom has raised temperatures between Brussels and Moscow. We might ask: is the case a sign of European bullishness in the face of Gazprom’s mounting commercial and strategic challenges and diminishing domestic patronage? Or is it an expression of frustration at Gazprom’s continued capacity to be a spanner in the works of Brussels long term plans for European gas markets? Or both?
  • The launch of the case was the latest in a growing list of problems faced by Gazprom. The US shale gas boom and expanding international LNG capacity has caused increasing volumes of gas to flow to Europe and put Gazprom under increasing pressure in its major export market. At the same time it is struggling to maintain its domestic influence and commercial dominance.
  • Those who are hope to see Gazprom’s place in the European market seriously undermined will probably be disappointed. Neither Europe’s strength nor Gazprom’s weakness should be overstated. Most likely will be an outcome in which Gazprom pays a politically negotiated price, and Europe agrees not to bite the hand that – for the foreseeable future – fuels it.

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