|Quoting MD11Engineer (Reply 48):|
Quoting Baroque (Reply 45):
(As a separate matter, if Europe truly is paying $500 per 1,000 cubic meters, as Gazprom has claimed, it is seriously overpaying. That corresponds to $84-a-barrel oil.)
Is this the price the end customer pays or the price at which the German gas companies buy the gas from the Russians? If it is the first case (which I wouldn't be surprised if it is), then it is the effect of a f*cked up privatisation about 20 years ago, when the previously government controlled and state owned gas companies got sold to private owners, leading to a change from government and parliament controlled regional monopolies to privately owned regional monopolies.
It is not clear from the exact wording but such discussions are almost always (always really, but I am being cautious) about wholesale rates to the companies buying the gas. The gas sellers generally do not worry too much about what the reticulation charges are!!
That was really in part why I quoted at length because you need to include the bit about the lags. They are common in contracts. So Europe would have benefited from them last year when oil prices were ratcheting up. So having rates now well above CURRENT oil equivalent would be expected. They should however fall over the next couple of months.
The question about why Germany had locked in to a level of dependence on Russian gas goes back to the reserves pattern. If you want long term gas (and short term gas is a bit tricky!!), Russia is still Germany's best bet.
And pipeline gas even from Turkmenistan is going to be cheaper than LNG, and probably in the long run more reliable. If you are getting Qatargas LNG, there are all the usual ME problems. In any case, Qatar is really quite a way away from Europe - even from Turkey if that counts as Europe!