Russian Gas Remains Competitive in Europe

30 june 2017

“During the last decade, the competition between gas producers has been increasing, to become even more intense in the future,” Analytical Center expert Alexander Kurdin said, giving his report “State Policy Priorities for the Competitiveness of Arctic Gas Projects” at the plenary session of the 13th Russian Petroleum and Gas Congress.

The additional demand for liquefied natural gas comes from countries in the Asia-Pacific region and — unexpectedly — in the Middle East. In respect to the proposal, Australia, which began introducing the long-awaited liquefaction projects, is the leader of change, Mr. Kurdin said.

According to the expert, the interregional price differentiation in gas markets has smoothed, with no small thanks due to the gradual formation of a single global market.

“Russian gas remains competitive in Europe, but pressure will increase,” Mr. Kurdin said. “The minimum acceptable prices for Russian gas suppliers to export markets are $ 200-250 per thousand cubic meters, and there is a risk that our gas supplies, in case of the negative development, will be balancing on the verge of profitability.”

Along with the competitiveness of Russian natural gas, the issue of investment attractiveness of Russian gas projects is nevertheless important. Such projects are supported by the State. The most important areas of support are:

— ensuring regulatory stability;

— flexible taxation;

— partnership between the State and private businesses in infrastructure development and personnel training;

— developing competition in the domestic market to encourage local producers;

— supporting technology development in Russia;

— settling political conflicts.