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Gas and Israel: how Europe found another replacement for Russia

As reported this week by Reuters, the Israeli government approved the agreement with the European Union, which planned the construction of the offshore pipeline EastMed.

Numerous Russian publications for years parasitic on the description of a defeat of Russia broke out publications, the main leitmotif of which came down to the fact, that the Old world has found an alternative to Russian pipeline gas. However, the joy of their target audience might be short-lived for several reasons.

In the world of energy, there comes a time of chaos

Began the transformation of world energy is accompanied by a sharp "interspecific" and "intraspecific" fight: new sources of energy are competing with the old. In turn, the producers announced "leaving" (even if not immediately, but in the long term of several decades) of oil and gas is also actively compete among themselves for fear that in twenty or thirty years, their products will not be needed in such volumes and will remain partially unrealized. This is especially evident in the LNG sector, when an acute crisis has postponed a new wave of projects. Nevertheless, the company plans to resume construction of new plants even in the face of possible risks of overproduction.

How to understand who will be more successful in this competition? In a zero approximation the first lower non-market support measures for low-carbon energy sources. Then we can assume that the one will win who will offer a minimum price for their goods. The minimum price is, in turn, is determined by the cost. It would seem that everything is simple. In fact in such capital-intensive areas as energy, especially renewable energy, the cost of production/production of energy carriers or directly electricity depends crucially on the value of the invested money, as already in simple examples we discussed earlier.