The Europeans may be investing heavily on solar and other green power sources, but they are still turning on gas-fired plants at a rate of several gigawatts of capacity a year.
As a result, even though retail and industrial demand for natural gas in the eurozone has been flat if not actively declining, the energy analysts at Sanford C. Bernstein now believe all those new power plants will need another 6 billion cubic meters of gas this year to turn into electricity.
This is about 1% growth — probably not enough to move the fundamental needle for Gazprom (OTCPK:OGZPY) but still more than enough to eliminate a sentimental overhang on the stock.
With that major negative off the table, we are looking to buy Gazprom on the dips. The story remains the same, but the valuation is as good as you will find in any large-cap emerging markets corporation — even in currently high-fling Russia.
And actually, the very fact that people have switched to overweight on Russia means that analysts are no longer focused exclusively on the negatives around OGZPY.PK, which exerts massive influence within the Russian market.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.