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According to global rating agency Fitch Ratings, rising geopolitical tensions in recent months have contributed to the already tight European natural gas market and spurred research for additional supplies.
Fitch Ratings says intensified geopolitical tensions may have delayed Gazprom’s Nord Stream 2 pipeline, which will transport gas from Russia to Germany, boosting gas price volatility and prompting research into alternative gas supplies to Europe.
It is further pointed out that other key factors contributing to the already narrow European natural gas market are low gas inventories and reduced supplies by the Russian company ‘Gazprom’.
“While Europe will remain dependent on Russian gas supplies in the near term, in the longer term this could lead to a more diversified supplier base and faster energy transitions,” Fitch Ratings said. .
Russian company Gazprom has been the largest supplier of gas to European markets, meeting about a third of Europe’s gas demand.
However, Fitch Ratings said, the limited supply of the company’s supply to demand recovery and the low utilization of Gazprom-related reserve facilities during the second half of 2021 contributed to a significant increase in the price of gas in Europe.
“Although the company is said to have continued to meet its distribution obligations under long-term contracts, it has not offered any significant volume in local markets. “As a result, Gazprom’s pipeline deliveries to the European market have decreased,” the global rating agency said in a statement.
Fitch Ratings said liquefied natural gas (LNG) and other pipeline suppliers have helped mitigate reduced Russian gas supplies in the short term.
But, the agency added, European consumers competing with Asia for LNG gas and low gas levels in European reserves lead to higher gas prices in Europe.
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