Europe saved $8 billion in 2018 on their Russian gas import bill

The change began, he said, when rising US gas output led Qatar, the world’s largest LNG exporter, to divert LNG supplies to Europe, shaking up pricing on the continent and widening the influence of the Dutch TTF benchmark price.

“Because of the big challenge from LNG and better regulation, there was a lot of renegotiation of pipeline contracts and we estimate in 2018, Russian pipeline exports to Europe were $8 billion cheaper than they would have been with conventional oil indexation,” he told Reuters.

“If there were a full adoption of the EU Directive, we could see more LNG to Central Europe where prices are $0.50 per mmBtu higher than TTF. This would lead to an additional $1.3 billion a year in savings,” he said.

Birol’s remarks boost the case made by US LNG producers, and more recently Donald Trump, for Europe to import more of the super-chilled gas.

Russia says the cost of US LNG – buying, liquefying and shipping it across the Atlantic – is far more than piping Russian gas. But Birol made no price comparisons, arguing instead that market forces led to the change in Russia’s long-term gas contract structures.

The IEA in its annual report forecast the LNG market to grow 26% between now and 2024 to 546 billion cu m, with China becoming the largest buyer and the U.S. the biggest seller.