LNG is unlikely to replace Russian gas supplies to Europe until 2020: experts

Russia will continue to provide competitive natural gas supplies to Europe until mid-2020, when it should be possible to significantly offset Russian imports from other sources, including LNG supplies, participants at the Flame conference in Amsterdam said.

Last year, following an escalation in the supply chain through Ukraine, the European Commission urgently issued a report on an updated energy strategy aimed at diversifying Europe's energy sources to improve supply security.

The report refers to the supply of LNG to Europe as one of the key additional sources in addition to Russian gas. "The increase in LNG terminals in Europe should be the new norm, but Russia and Norway have the right to be in the European market." Analyzing the picture of supply and demand, experts believe that Russia provides supplies at the lowest cost for Europe.

Until 2020, LNG supplies will not be technically feasible in Europe, according to analysts. US LNG supplies to Europe are estimated at more than $ 10 /mn BTU (Eur27.70 /MWh), including all costs, which is much more expensive. It is believed that in the near future Gazprom is unlikely to pump gas to Europe below the 2014 level.

Jonathan Stern, a research fellow at the Oxford Institute for Energy Research, says Europe will not see an increase in gas from other sources such as North Africa, the eastern Mediterranean and others in the short term. Although these regions have high potential reserves, they are limited by political and economic issues. "Export of Israeli gas in the form of LNG in the amount of 10 billion cubic meters through Egypt is possible after 2020, but this will depend on the economic and political situation in the region," Stern said.