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Europe falls in love with cheap Russian gas: Europe gas markets long-term outlook H2 2016

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21 December 2016

Europe falls in love with cheap Russian gas: Europe gas markets long-term outlook H2 2016

Report summary

Market fundamentals are set to tighten as coal retirals support an additional 19 bcm of gas demand by 2020. Indigenous supply is set to decline over the same period, more so than our previous update, as we incorporate further restrictions on Groningen and disruptions to the Danish Tyra field. Pipeline imports from Norway, Algeria and Russia have all increased in 2016 and future pipeline imports will remain resilient. The stage is already set for a competition between low cost Russian gas and cash expensive US LNG. US LNG will be at the margin in Europe, forcing the shut-in of some US LNG export capacity.

Table of contents

    • Market fundamentals in Europe are tightening
    • but pipeline imports in Europe are resilient
    • European spot prices will be set by US Gulf Coast LNG FOB in the medium term
  • Economic outlook
    • Dimension 1: Energy security, solidarity and trust
      • Main projects and initiatives:
      • Security of supply
      • Dimension 2: A fully integrated internal energy market
      • Main projects and initiatives:
      • Internal market
      • Competition
      • Anti-trust enforcement
    • Dimension 3. Decarbonising the economy
      • Main projects and initiatives:
      • The Paris Agreement, an upside risk for the EU climate change targets
      • Clean Energy for all Europeans
      • Renewable energy targets
      • Strengthening the EU emissions market
      • Dimension 4. Energy efficiency
      • Main projects and initiatives:
      • Energy efficiency targets
    • Dimension 5. Research, Innovation and Competitiveness
      • Main projects and initiatives
    • Power sector
    • Non-power sectors
      • Industrial sector
      • Residential/commercial sector
      • Other sectors
      • Road transport
      • LNG marine bunker sector
    • Groningen production restrictions continue to constrain European mid-term supply with further pressure from UK declines and Denmark re-development
    • Longer term European unconventional prospects disappoint and decline accelerates
    • LNG import infrastructure
    • Existing infrastructure
    • Projects under construction
    • Pre-FID projects
    • Other Services
    • Southern route
    • Nord Stream expansion
    • EC's decision on OPAL: increasing the utilisation of Nord Stream 1
    • Southern Corridor
    • LNG
      • US LNG deals
      • Put option deals
      • Swap agreements
      • Other LNG deals
    • Piped
    • Supply-demand balances
    • Flow dynamics – Russia
    • Flow dynamics – Norway
    • Flow dynamics – Algeria
    • Flow dynamics – Southern Corridor
    • Flow dynamics – LNG
  • Risks and uncertainties

Tables and charts

This report includes 31 images and tables including:

  • Q3 2016 GDP growth (2010-2035)
  • Energy Union package
  • Gas demand by sector
  • Domestic gas supply
  • Key infrastructure
  • Capacity growth by fuel*
  • Power generation mix*
  • Regas capacity by status
  • Regas capacity and contracted volumes
  • Pipe capacity
  • Pipe capacity and contracted volumes
  • Europe supply-demand gap
  • Europe contestable demand and competing supply
  • Europe demand and supply mix
  • Europe contestable demand and supply mix
  • Russia contracted and uncontracted flows into Europe
  • Russia flows by major pipelines into Europe
  • Norway contracted and uncontracted flows into Europe
  • Norway flows by major pipelines into Europe
  • Algeria contracted and uncontracted flows into Europe
  • Algeria flows by major pipelines into Europe
  • Turkey demand and supply (including transit)
  • Southern Corridor flows (transiting Turkey)
  • Contracted and flexible LNG flows into Europe by importing regions
  • Total LNG flows into Europe by importing regions
  • Contracted and flexible LNG flows into Europe by exporting regions
  • Total LNG flows into Europe by exporting regions
  • EU Energy Security Package
  • EU Third Energy Package
  • EU climate-energy targets
  • Carbon emissions forecast versus targets - EU 28

What's included

This report contains:

  • Document

    Europe falls in love with cheap Russian gas: Europe gas markets long-term outlook H2 2016

    PDF 990.30 KB

  • Document

    Europe falls in love with cheap Russian gas: Europe gas markets long-term outlook H2 2016

    ZIP 1.23 MB

  • Document

    Europe gas markets long-term outlook - H2 2016.xls

    XLS 1.19 MB

  • Document

    Executive summary

    PDF 79.77 KB

  • Document

    Economic outlook

    PDF 92.77 KB

  • Document

    Policy and regulation

    PDF 211.25 KB

  • Document

    Demand

    PDF 129.22 KB

  • Document

    Supply

    PDF 101.58 KB

  • Document

    Infrastructure

    PDF 530.02 KB

  • Document

    Contracts

    PDF 105.25 KB

  • Document

    Supply-demand balances

    PDF 169.66 KB

  • Document

    Risks and uncertainties

    PDF 57.78 KB

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