High cost of gas in the EU: how the region itself destroys its competitiveness

Alexey Gromov, Principal Director on Energy studies at the Institute for Energy and Finance, commented on the situation with rising gas prices in the EU to the Neft and Capital Internet portal.

Alexey Gromov recalled that even the current LNG supplies from Russia to Europe are largely carried out under long-term contracts. Details of the deals with NOVATEK on supplies from the Yamal LNG project have not been officially published. But it is not difficult to guess that since European companies have concluded a long-term agreement with a Russian company, the document provides for a pricing formula that is comfortable for the EU.

"Russian gas, including pipeline gas that went through the Nord Stream, the Ukrainian gas transportation system and partly through Yamal—Europe, largely brought down the average gas price level in the European Union. Now that there are no purchases in these areas, the EU economy is suffering from the high cost of energy resources that the region buys on the spot market, where prices are very volatile," the expert says.

The irony is, as Alexey Gromov noted, that Qatar and the United States insist on concluding long-term contracts in LNG sales to Europe. This is the same thing that Russia has been offering for many years. But today, the price conditions for European buyers, taking into account the current realities in the LNG market, are clearly worse.