The crisis in Ukraine and the potential for reduced Russian gas supply to the European market has coincided with a particularly tight global LNG market. China has been sucking in more spot LNG cargoes, and pipeline gas flows from Algeria and Libya to Europe are down. The European market, however, is comfortable with stocks high after a relatively mild winter. Middle Eastern and North African producers could potentially supply more gas to the European market but at what price?
An implied threat by Russian state firm Gazprom to cut gas flows to Ukraine, transit route for half of the gas supplied by Russia to European clients, led to a spike in natural gas prices on the continent, which has been stung twice during the past decade by Russian gas stoppages, due to disputes between Moscow and Kiev over payment for Russian gas. Higher gas prices are likely to dampen further demand for gas to the benefit of cheaper US coal imports. (CONTINUED - 2556 WORDS)