Gazprom pipeline.

The traditional gas suppliers may find themselves in a tough spot as a big gusher of liquefied natural gas is going to be ready for the global market in the next five years. Russia’s state owned company Gazprom is one of the companies that will be most affected by these changes. Gazprom is currently the greatest supplier of natural gas to Europe, but it has taken certain steps in turning east towards China in order to increase its growth. Some analysts see this measure as a counter move due to tricky relationships with Europe which is Gazprom’s biggest export market.

Last Wednesday partners at the European Union accused Gazprom of being unfair towards competition and giving unequal prices to different countries in Eastern and central Europe. The representatives of Gazprom rejected these accusations saying that they are unfounded and that they expect a political resolution to this matter. In cooperation with China, Russia’s priority is to extend the pipeline that goes through west Siberia to China. The vice president of CNPC Economics and Research Institute Qian Xingkun said that the strategic partnership between China and Russia is the key to integrating the global market and securing regular supply. He also added that this will not be easy and that there are many challenges ahead. “Pipeline supplies are much less competitive than LNG imports,” said Qian Xingkun at the annual CERAWeek conference for energy in Europe. He also added that most of the potential for growth will be located in southern and eastern markets of China. Qian Xingkun said that he expects certain things out of Russia, which include more collaboration and more trust. During his speech he also said that China has a vast number of energy sources and that they could be oversupplied in the next couple of years.

China hopes for lower prices as well as a priority switch to the eastern Sino-Russian pipeline route. “Russia want to get a quick alternative to the western pipeline,” said Matthew Sagers, who is the head of Caspian and Russian energy research at the IHS. He also stated that this is a signal from Russia to Europe that Gazprom has other markets as well. Europe is also trying to get more independent from Gazprom and look for alternative energy suppliers.