Market Research Logo

Eastern Europe and Russian Natural Gas: The movement away from Gazprom

Eastern Europe and Russian Natural Gas: The movement away from Gazprom

Summary

The supply of natural gas to Eastern Europe has long been the preserve of Russian state-backed giant Gazprom, but their decade’s long domination of energy supply and heavy influence in the internal machinations of former Soviet countries is now under threat. Since the early promise of vast shale gas riches evaporated amid poor early drilling results, the movement away from dependency upon Russian gas has gained impetus from the growth of Liquid Natural Gas, the development of reverse-flow pipelines and new regulations from the European Union. The combination has given several Eastern European states far improved deals and greatly improved their political bargaining power. Whilst the Russian supply cannot be directly replaced, movement away from one source of natural gas has occurred and is likely to gather pace.

Key Findings


Analyzes the efforts to reduce dependency on Russian natural gas in Eastern Europe
Evaluates the potential sources of new gas and their likely impact
Identifies the present trends in the Eastern European gas energy market

Reasons To Buy

What is the present state-of-affairs of gas supply in Eastern Europe?
What means are there to reduce dependency on Gazprom?
What progress has there been in Eastern Europe?

Key Highlights

An important development in global gas supply has been Liquid Natural Gas produced in vast quantities. Not only does LNG reduce the requirement from Gazprom but provides an important lever to gain an improved position. Significantly, both Poland and Lithuania have been able to change their energy policies to a large extent. However, LNG is not a cure-all. Demand is rising and major consumers, such as Japan, are likely to require more in the light of a failing appetite for nuclear power. Despite this, LNG has clearly been important in providing a means for Eastern Europe to diversify supply and improve their geopolitical situation.
An important development has been the ability for countries to indirectly supply Russian gas to one another, limiting the scope for Gazprom to assert control. Not only has energy security improved but it is much harder for Gazprom utilize its bulk to its benefit. Crucially the European Union has been at the heart of the changes. Much money has come from European coffers to develop the pipeline network. Additionally, the imposition of new rules tacitly designed to neuter Gazprom in Eastern Europe gave former Soviet bloc countries important new tools to strengthen their political and economic hands.
The move to reduce the influence of Gazprom has been damaged by the continuation of a proposed pipeline directly connecting Russia and Germany. Numerous Eastern European countries voiced disquiet and Gazprom’s partners have all pulled out, yet it appears to remain on course. Some fear the pipeline will undermine the international co-operation which has characterized the regions outlook on regaining influence and control from Gazprom. The reaction of the European Commission is important – many are looking towards them for enforcement of anti-competition regulations that have already proven useful in halting the South Stream pipeline.


Overview
Catalyst
Summary
Eastern European dependency on Russian gas
Gazprom’s near complete control
High expectations for shale gas in Eastern Europe evaporate
A Pipedream: Regional Gas Supplies
Once the great new hope, Polish shale now diminished
Optimism for Lithuania and Romania evaporates as Ukrainian turmoil continues
Bulgarian conventional supply
From Gazprom to LNG: Diversifying Gas supply
LNG will help Eastern Europe, but it is only part of the solution
LNG helps wean Poland off Russian Gas
Lithuania LNG deal diversifies supply
The long-term future of LNG is far from certain – Eastern Europe must take note
Interconnecting pipelines diminishes Gazprom control
Still no clear alternative supplies in many countries
European Union gas liberalization
Third Party Package
Nord Stream 2 – a step backwards for Eastern Europe
Conclusion
Eastern Europe now less dependent on Russian gas
Appendix
Definitions
Sources
Further Reading
Ask the analyst
About MarketLine
Disclaimer
List of Figures
Figure 1: Percentage of natural gas imported from Russia during 2014
Figure 2: Predicted Shale Gas Reserves in Poland
Figure 3: Predicted Shale Gas Reserves in Ukraine
Figure 4: Bulgarian Gas Fields
Figure 5: Breakdown of Global LNG Supply
Figure 6: Imports of Gazprom Natural Gas
Figure 7: FSRU Independence, a Floating Storage Regasification Unit
Figure 8: Central Eastern Europe Gas Supply Flow
Figure 9: U.S Vice President Joe Biden in Latvia
Figure 10: Nord Stream 2 Pipeline Route

Download our eBook: How to Succeed Using Market Research

Learn how to effectively navigate the market research process to help guide your organization on the journey to success.

Download eBook

Share this report