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Russia Wants Natural Gas OPEC

Russia Wants Natural Gas OPEC
Image by Dyfed Loesche

With Russia keen to finish the Nord Stream II pipeline to Germany (and make Germany 70% reliant on Russian energy), even while incurring the wrath of the Trump administration who has heavily sanctioned the project for national security reasons, it seems the Kremlin thinks an ‘OPEC’-like organization would help support a healthy natural gas price globally.

Last week Russian Energy Minister Alexander Novak stated the creation of a coordinating body that would regulate the volume of gas sales and prices “has been under active discussion lately,” reported Russian state news agency TASS. Russian Deputy Minister of Energy Anatoly Yankovsky mentioned this prospect in early June.

Nikita Maslennikov, a leading expert from the Institute of Contemporary Development, told Vedomosti that the situation on the global gas market is even worse than what is currently happening with oil. The drop in prices is sharper, he pointed out, adding that destabilization and a lack of balance have been noted in Europe, Russia and the Asia-Pacific. Fierce competition between pipeline gas and LNG is also a serious factor affecting the market. The US, Qatar and Australia export cheap LNG to Europe and Asia, causing a drop in demand for pipeline gas (mainly coming from Russia) and concurrently, a drop in its prices, wrote TASS.

“The global gas industry has been facing the same issues as the oil industry, like excess supply, increased competition, and a drop in prices. This is why the market needs a regulator to avoid chaotic prices. This is obvious. Another question is whether it will appear,” head of the AMarkets analytical department Artyom Deyev told Vedomosti.

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