Gazprom in Europe – two “Anni Mirabiles”, but can it continue?
Gazprom has confounded many expectations by enjoying two record years of gas sales in Europe in 2016 and 2017. External factors have certainly played a role in its success, with overall European demand rebounding, indigenous production continuing to fall and alternative sources of imports failing to deliver at the expected levels (especially LNG). In addition, Gazprom has demonstrated a level of flexibility in its pricing strategy that has kept its gas very competitive, with the result that its market share in Europe has grown to 35%. However, the anticipation that this figure could rise towards 40% and above has led EU politicians and policy-makers to become concerned about over-dependence on Russian gas, and many now wish to ensure that Gazprom’s future options are limited by obstructing potential new pipelines. In addition the politics surrounding Ukraine, the imposition of stricter US sanctions, questions surrounding the DG COMP investigation into Gazprom’s activities and the Stockholm arbitration ruling over contracts with Ukraine add further layers of complexity. This paper therefore explores whether Gazprom’s two anni mirabiles in 2016 and 2017 can be repeated or whether Russian gas faces a more challenging environment in the rest of the decade.