LNG

It is impossible to understand the outlook for energy prices – internationally or at the domestic level – without looking carefully at what is happening in the gas market. The simplistic assumption is that because demand is rising, prices must also increase inexorably. This assumption underpins a lot of official forecasts and the business plans of some optimistic producers. The reality is much more complicated. The emergence of a spot market suggests that there is a strong chance of prices falling over the next decade. Read more

The cancellation of the Shtokman LNG project by Gazprom was bad (if not totally unexpected) news for Gazprom.  The company will now be even more dependent on selling pipeline gas into northern Europe.  That will put pressure on prices and could squeeze out other suppliers in areas where Russia has particular political leverage – such as Germany.   The more important consequence though is that the decision will force a reappraisal of several other LNG projects around the world which have been relying on ever rising gas prices. Read more

According to the most recent published estimates the economy of the eurozone countries will decline by just 0.3 per cent this year.  But the reality could be worse.  GDP data is always unreliable and hard numbers on some of the key elements in the economy such as energy consumption often provide a more accurate picture of what is really happening.  Recent data showing a sharp fall in gas consumption suggest a sharp contraction in recent weeks. Read more