Bloomberg: Add Natural Gas Prices to Putin’s Long List of Problems

After last year’s plunges in oil and the ruble, Russian President Vladimir Putin now has another thing to worry about: the price of natural gas. While the fuel held up better than oil last year, weakening just about half as much, the average cost on Europe’s biggest open market will fall 13 percent this year to the lowest since 2010, according to the median of 13 traders, brokers and analyst estimates compiled by Bloomberg.

Part of the reason for the drop is that global production capacity of liquefied natural gas will jump the most in four years, boosting competition for Russian pipeline flows that meet almost a third of Europe’s demand.

Brent crude, used to help price state-owned OAO Gazprom’s gas sales to Europe, slumped 48 percent last year on global oversupply. Russia gets two-thirds of its export revenue from oil and gas and Putin has warned the nation of a recession as the world’s biggest energy exporter also contends with a 34 percent drop in its currency versus the euro.
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