Insight: Politics, not economics, drives decision-making in European gas

While politics have always played an important role in the energy sector, over the past few years a trend toward a new class of energy-related decision-making seems to have emerged, with non-economic or sub-economic policies increasingly in evidence. European gas in particular is likely to be impacted by more protectionism-driven policies – from the US, the UK, Russia and others – as the application of national security goals in energy policy increases in significance, which in turn is having an impact on gas infrastructure investment, trade flows and prices. The increasing politicization of European gas will inevitably lead to decisions on infrastructure – especially around LNG import facilities and pipelines – that will see shifts in European gas flows and gas price evolution, with infrastructure costs passed on into gas network charges and energy bills. German LNG ambition One country currently in the center of the politics-economics dichotomy is Germany. Europe’s biggest gas consumer with demand at around 90 Bcm/year, Germany has found itself in the middle of a political quagmire, with the US and Russia pulling at Berlin on either side and even Qatar making a play to impact Germany’s gas supply. The German government’s support for an LNG… continue reading

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