If Western sanctions will only have an effect on Russia’s energy outlook in the long term, there is one factor that is likely to exact a more short-term cost. And Gazprom, the Russian state-owned gas company, is already feeling the pain. The Financial Times reports:
Russia’s Gazprom could lose 18 per cent of its revenues as a result of competition from US liquefied natural gas exports, according to a New York-based think-tank.European consumers can expect to pay 11 per cent less for their gas as a result of the downward pressure on world prices created by rising US LNG exports, hitting revenues of the Russian state-controlled gas group, according to an analysis published on Monday by the Center for Global Energy Policy at Columbia university.The US shale revolution, caused by advances in production techniques from reserves that were previously not commercially viable, has boosted the country’s gas production and created expectations that the country could become a significant exporter of LNG, at prices that will be competitive in world markets.
So far, Putin has appeared both unimpressed and unhindered by Western sanctions. He has escalated the crisis in Ukraine whenever it suits him, he continues lie through smirking teeth about it, and meanwhile he is showing his power over the oligarchs at home.To the extent that his power is based on the strength of Russia’s energy sector, however, Putin’s position could be deteriorating. U.S. exports of natural gas, especially as LNG export terminals are completed over the next few years, are going to shoot up. If the energy export-reliant economy crumbles, that spells real trouble for Putin.