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Nord Stream gas pipeline extension from
Germany to the UK would be beneficial for continental Europe. The new pipeline
would allow German gas consumers to buy more Russian gas at the British market
price. In the past three years, the average price of
Russian natural gas at the German border was some 30% above the NBP level,
so taking less expensive fuel from the flow running through the German territory
would make a lot of sense. There is no guarantee that the UK price will always
be lower than the continental one, but it is good to have a choice between the
oil-linked and spot market indexed price of gas.
The new link can
increase volumes of Russian gas exports, so the project is
beneficial for Gazprom as well. In my view, the drop of the price of
gas is not bad at all. A fast nickel is always better than a slow
dime.
Mikhail Korchemkin
East European Gas
Analysis
Malvern, PA, USA
October 8, 2012
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