Why the EU Wants to Limit Its Dependence on Russian Gas


Jan. 19 2016, Updated 7:58 a.m. ET

Bilateral relations

The differences between the EU (FEZ) and Russia (ERUS) are growing at a larger pace. Recently, the EU (European Union) supported Turkey when authorities shot down a Russian plane. The EU, led by the US, opposed Russia’s aggression in Ukraine. This shows that these superpowers are engaged in a cold war with each other. The EU is near the North Pole. As a result, the need for natural gas isn’t avoidable during some parts of the year. A country with so many differences can exploit the EU. Experts think that Russia’s leadership is a challenge for NATO. EU members are important allies in NATO. NATO is led by the US (SPY).

[marketrealist-chart id=977600]

The European market is crucial for Gazprom PAO (OGZPY) because it operates with an 85% production mix in natural gas. US counterparts like ExxonMobil (XOM), Chevron (CVX) and Occidental Petroleum (OXY) operate with a production mix of 46%, 33%, and 25% in natural gas.

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Other possible new players

Since crude and natural gas are at a multiyear low, Middle East countries like Qatar, Iran, and others will try to increase their revenue from natural gas exports. The fate of non-renewable energy exporting countries could be impacted by growth in renewable energy sources. The above graph shows how RSX performed in the last five years. In the next part, we’ll discuss moving averages and analysts’ estimates for upstream companies.


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