East European Gas Analysis: EU to benefit from Nord Stream extension to the UK

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

Dr. Mikhail Korchemkin is the founder of East European Gas Analysis (EEGA), an independent consulting firm based in Malvern, Pennsylvania, USA. EEGA specializes in cost-benefit and financial analysis of natural gas projects in the former Soviet Union and Eastern Europe