Russia seems not to understand one thing. The commercial dynamics for LNG from the US are vastly different from the commercial dynamics of Russian pipeline gas. Pipeline gas, once the pipeline makes landfall cannot be rerouted easily. It goes where it goes no matter what the end destination goes through. US LG can chase higher margins if those are available. In a low price market as we are in one now everyone suffers the same. But once prices in Asia go up again, LNG quickly heals itself with new dollops of cash while pipeline gas often continues to languish. Europe is the dumping ground for LNG – no matter what US politicians say. LNG makes its money somewhere else and aims and not losing too much money on Europe if this is what happens. It’s an unequal competition that the inflexible pipeline cannot hope to win because we compare watermelons to apples.
Russia’s strong natural gas shipments to Europe may be an attempt to test the resilience of U.S. exporters, according to Citigroup Inc.