Bloomberg: Gazprom Is Losing Its Market Muscle

Gazprom, the state-controlled, Moscow-based natural gas giant has long played a double role: as an instrument of Kremlin foreign policy; and as a major source of tax revenue for Vladimir Putin’s government.

Things have changed. Gazprom has long been accustomed to dictating terms because of its size. In the European Union, it supplies about 30 percent of the gas. But with a 70 percent drop in profits, the Russian company finds itself fighting to protect its share of a market it depends on for as much as a third of its revenue of $100 billion. Gazprom is no longer a potent diplomatic tool at a time when customers have many more options.

By 2025, says the International Energy Agency (IEA), gas imports by the EU will account for 77 percent of its consumption, up from 63 percent now. Gazprom will not necessarily be supplying Europe with those extra imports. American companies will be providing liquefied shale gas to European power plants starting next year. “U.S. shale gas will provide a very important opportunity for European consumers to strengthen their hands,” says Fatih Birol, executive director of the IEA. U.S. exports may make up half of flexible liquid natural gas volumes heading to Europe by 2020, says Philip Olivier, chief executive officer of Engie Global LNG, a shipper of flexible LNG. “Flexible” means the gas can be shipped anywhere. MORE