There situation around Ukraine keeps escalating. Europe and Russia seem to be competing for it. The «Euromaidan» that is going on in Kiev came as the result of President Yanukovich's decision to abandon signing an agreement with the EU. This fact made Brussels angry. The USA urges European politicians to be tough in fighting for Ukraine and show the opponents all the trump card up their sleeves.
It is all about friendship with Russia once again. The EU threatens to deter the construction of Gazprom's most ambitious project called South Stream.
EU Shows Unexpected Interest In natural Gas
In early December, Brussels made an unexpected statement saying that all those agreements signed between Gazprom and the countries involved in the South Stream project do not include some of the basic principles that guide the international market of natural gas. All those Southern participants of the EU were strongly recommended to revise their agreements with the Russian energy giant. Still, European officials do not say why they become increasingly interested in the South Stream project all of a sudden. Still, they pretend it has nothing to do with the current situation in Ukraine.
EU's Demands
According to EU officials, the South Stream cannot be owned and managed only by Gazprom (no monopoly, in other words).
The stream should be available to third-party energy companies.
The gas pumped through the South Stream pipeline should come from several sources (Russian gas should be the only gas coming through the pipeline).
The natural gas prices in the EU should be established and regulated by non-Russian regulators. They do not accept Russian prices since they are too high.
Well, this is not unexpected neither for the EU nor for Russia. This has been a long confrontation.
For reference sake, the construction of the South Stream project started on December 7th 2012 on the Russian coast of the Black Sea. The first pipeline of the stream is expect to start working in 2015. Its estimated capacity is 15,75 Bcf of natural gas. The project is expect to start working to the full in 2018, just 12 months before the gas transit contract between Russian and Ukraine expires. Now, hen the EU is advocating the revision of all those contracts, the terms may be changed. Maybe this is the very help promised to Ukraine by the EU?
Gass Prices Through Traders' Eyes
US natural gas futures showed a strong rally amid lower inventories. Wintertime is the time when more gas is spent on heating needs, which reduces NG inventories. In December, the inventories decline down to 3,614 trillion cubic feet, which is 200 Bcf below last year's figures.
Gas futures gained almost 7% up to $4.187 per 1 million BTU last month. Therefore, traders recommended buying Natural Gas January 2014 (NGF14) futures after corrections.
Gasprom's Stock
More often than not, conflicts affect the stocks of the companies involved. The same holds true for Gazprom, Masterforex-V Academy reports. Later last month, the company's stock traded around the levels seen in 2005. Investors and traders seem to be disappointed with the stock since they understand Gazprom is involved in some major conflicts, which undermine the company's stability.
Do you think, the current situation in Ukraine and the current weakness of Gazprom's stock are directly related?
