Gas price surge in Europe: What drives it and who could profit from it?

Ukraine’s incursion into Russia’s Kursk region and the attack on the Sudzha gas transit station through which Russian gas is exported to Europe are the “most immediate” reasons for the recent upsurge of natural gas prices in the EU, international oil economist and global energy expert Dr. Mamdouh G. Salameh tells Sputnik.

author: Economician

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category:commodities

“Nobody knows what the Ukrainian forces will do with the transit point. Will they let the flow of gas to the EU continue, or will they stop it? It is this uncertainty that is behind the gas price rise,” he explains.

The growing demand in China and the Asia-Pacific for liquefied natural gas (LNG) also helps drive up prices, as “Asia is now competing very vigorously with the EU for LNG supplies,” Dr. Salameh notes.

“A final reason is delays in LNG shipments from Novatek’s Arctic LNG 2 project because of tightened US sanctions,” Dr. Salameh adds.

According to him, the ensuing situation might benefit any natural gas and LNG producer who can meet the demand, including Russia, “if the Ukrainian forces don’t destroy the strategic gas transit point or don’t stop the flow of Russian gas, and also Novatek if it can ship some LNG very soon.”

Regarding the consequences of this price surge, Dr. Salameh suggests that it will help accelerate the “worsening EU’s economic situation.”

“One reason is because it has to compete with Asia for the available LNG in the spot market. This will plunge its economy into recession,” he elaborates.

Meanwhile, the expert notes that Russia and Novatek “could benefit from increasing sales of Russian gas to Europe via Turk Stream and LNG from Novatek.”