Europe's Glutted Gas Market Braces for More Flows From Caspian

Europe's Glutted Gas Market Braces for More Flows From Caspian

access_time2020-10-15 13:10:48

Russia now accounts for about a third of Europe’s gas supplies, TAP will be followed by several projects intended to decrease dependence on Russian gas, including the Baltic Pipe – bringing the fuel from Norway to Poland — and by new LNG terminals being designed for the European coast.

Those projects address concerns that Europe lacked diverse sources of gas interconnections with other producing regions. They represent “a united front against Russia” that is gaining momentum, said S&P Global Platts in a report last month.

Partners in the TAP project include BP, Azeribaijan’s state oil company Socar, Italy’s major pipeline operator Snam SpA, the Belgian company Fluxys and Enagas SA of Spain.

The effects of the new supplies in the market will be fully seen after it ramps up, which normally happens up to six months after its launch, said Elchin Mammadov, analyst at Bloomberg Intelligence. But it might take longer, as the European gas market oversupply situation will limit demand for the Azerbaijani gas.

“TAP will significantly improve energy security and diversification in southern Europe. It should help the region to secure better pricing terms from Gazprom,” said Mammadov.

After two warm winters and the coronavirus pandemic, demand for gas is sagging across Europe, leaving inventories well above the average for the season and benchmark prices below their 10-year average.

The “dramatic impact” of new Azerbaijani supplies will be seen in Southern Europe, according to Ahmed Hammoudan, senior gas trader at Eneco, a Dutch energy company.


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