Record Russian output putting pressure on natural gas markets
I don’t think that there is a lot of strategic planning in Gazproms actions. Its probably much more like doing what needs to be done and put a spin on it. Russia does not have alternatives to European markets when it comes to the bulk of its gas. Western Siberian gas fields are not connected to Asia. And the LNG facilities in Yamal are mostly not connected too plus their capacities are limited. At the same time Gazprom has started production on the new Bovankovo field and the old fields have not yet depleted. That’s an overhang of gas that’s not going to last forever. Gazprom is a victim of circumstances, not the big chess player.
European natural gas prices look set to fall for the first time in four years in 2019 as buyers keep a close eye on flows from Russia that reached a record last year. With a healthy amount of fuel in storage after a mild start to this winter, the outlook is bearish. That’s being exacerbated by an expected increase in imports, which would help offset declining production in the region. While Russia intends to maintain its grip on about 40% of the European market, fluctuations in that dependency will be closely monitored.
