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m vc takes on Russian gas, the better for Europe, say analysts Business

The supplies of Russian gas will bring many positive effects. As a result, domestic demand for LNG imports will decrease, which from a global perspective will lead to lower prices, analyst Ogan Kose from Accenture told Bloomberg.

The price of natural gas in Europe rose sharply after Russia reduced its supplies to the EU states after its invasion of Ukraine and the imposition of expired sanctions. In recent weeks and months, the European country has been trying to contract many LNG supplies in order to reduce its dependence on Russian gas.

The war on Ukraine, however, prompted Russia to speed up its plan to disengage from Europe. In the future, the country wants to put you on the Russian-Russian gas pipeline Sla Sibie. The highest representatives of both countries declared at the same time that they will discuss the construction of another gas pipeline, which could be named Sla Sibie 2.

There is always a buyer for Russian natural gas. Now it looks like it will be sold mainly in Asia in the future, Kose added for Bloomberg, saying that if Russia were to completely stop gas supplies to Europe, European gas prices could rise to five times the current level.

According to the BloombergNEF agency, it has not made any LNG purchases so far this year, and its appetite may remain low until the end, due to extremely high LNG prices and the threatening uncertainty surrounding the pandemic and the further development of the economy there.

Compete in world markets

Europe has been watching with tension as it has recently been fighting the waves of the covid-19 pandemic. If these Asian powers ignore all anti-pandemic restrictions, they will compete with Europe for liquefied natural gas on the markets, as confirmed by Goldman Sachs in their recent analysis.

The price of gas can also be affected by a global economic recession. The company Accenture estimates that even without it, gas consumption in Europe in the fifth year will decrease by a minimum of sixteen percent, due to the planned restrictions on consumption.

The combination of lower demand in Europe and Asia and new markets for Russian gas will lead to lower gas prices in the medium term. If the winter is harsh compared to previous winters, it will keep prices high for some time. However, the high price of this commodity will not last long, added Kose.

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