European Stability

 

The USA is discouraging investment. The political risk is real and feeding through into policy instability and uncertainty. The USA has upended traditional notions of friends and allies. Its actions have cost it a lot of friends for good.

Europe on the other hand remains steady, stable and united. Government support is structured through commercial contracts free-from political interference, and even protected from future political interference.

Europe's energy transition could well be the beneficiary of cheaper technology as Chinese manufactured equipment is "dumped" into Europe with the US tariff fall-out.

Development risk

Scaling risk

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European gas storage is full

European gas storage is full and Equinor has highlighted three potential catalysts that could provide short term relief for the current super low European gas prices

1. A delay to Nord Stream 2 due to sanctions
2. The lack of a transit agreement with Ukraine
3. A colder than expected winter

The Nord Stream 2 project was expected to come onstream on 1 January 2020. However with ongoing concerns that the EU's reliance on Russian gas continues to grow and Trump considering sanctions on the project, it is likely to be delayed.


Russia's agreement to transit gas through Ukraine also expires in January 2020 and there is current uncertainty on whether a new agreement can be reached between the two countries.


So upside to European gas prices to exist as we head into the winter in north west Europe.

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