Russia's Dominance Over EU Gas Market Comes to an End

Sep 10, 2013, 08:51 ET from World Review

VADUZ, Liechtenstein, September 10, 2013 /PRNewswire/ --

Europe is Russia's largest trade partner, taking 70% of its gas exports. However, Europe's recession since 2008 and America's shale gas revolution have led to a global gas glut, writes energy economist Dr Frank Umbach in World Review.

'Russia's export capacity to Europe will increase to 250 bcm a year by 2020 and more than 300 bcm by 2030,' he says. 'But Russia only has gas contracts for 158 bcm a year to Europe.'

'This combined with a decline in Russia's long-term contracts based on oil-indexed prices and its controversial 'take-or-pay' clauses - which lock in customers to specific quantities - have undermined Russia's traditional business strategies and business models,' he says.

'While Russia may benefit from high oil prices, it may further undermine its own future gas market share.'

This report World Review report is part of a World Review series that analyses the strategic implications of the Trans-Adriatic Pipeline's selection for the final route of the EU Southern Gas Corridor project.

Click here to view the full World Review series.

Information for the editor

World Review author Dr Frank Umbach is a Senior Associate and Head of the Programme 'International Energy Security' at the Centre for European Security Strategies (CESS) GmbH, Munich-Berlin and Associate Director of the European Centre for Energy and Resource Security (EUCERS) at King's College, London.

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