The growing glut of liquefied natural gas will create a “price war” between the US and Russia that could drive UK prices below those in North America, Vitol’s head of LNG said on Thursday.

Pablo Galante Escobar, a former oil trader who runs the LNG unit at the world’s biggest independent energy trader, said growing exports of US shale gas would soon force Russia to slash prices to remain competitive in its main market.

“The next war in Europe will be a price war, and it will be LNG versus Russian pipeline gas,” Mr Escobar told the International Petroleum Week conference in London.

“As ever price will clear the market. We see [UK gas benchmark] NBP (national balancing point) going below [US benchmark] Henry Hub at points in the next five years.”

The US shale boom has pushed natural gas prices in North America to less than half those in Europe in recent years.

The domestic US glut has been alleviated by the start-up of LNG exports in 2016, but the ramp up -alongside a surge in supplies from Australia and other countries – is expected to see LNG supplies soar almost 50 per cent between 2015 and 2020.

Mr Escobar said the LNG market would likely be “significantly oversupplied” for the next five years but saw the associated pressure on prices for the super-chilled fuel creating new markets, as well as raising demand in existing importers.

He said NBP would need to drop below Henry Hub at times to shut off flows from the US, sending a signal to shale producers to throttle back production if the glut overwhelmed the market.

Trading in LNG will also grow, Mr Escobar said, predicting that a larger derivatives market would soon develop, similar to that for oil, as the market becomes more global.

He said Vitol was looking at spending money on LNG infrastructure to increase its clout in the sector, where it competes with other independent traders like Trafigura and Gunvor, as well as energy majors like Royal Dutch Shell.

“We see ourselves investing in facilities for the LNG sector,” said Mr Escobar. Trafigura last month said it was rejuvenating an LNG import on Teesside in preparation for growing supplies and trading opportunities.

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