"In the past 10 years Russia has significantly expanded its sales of oil and natural gas in Asia, and first of all in China and Japan. This has been achieved through the implementation of two major projects: the construction of the East Siberia-Pacific pipeline and an LNG terminal in Sakhalin," said Analytical Center expert Alexander Amiragyan, speaking at the 12th strategic Oil Terminal 2017 congress.
According to Mr. Amiragyan, in this period the share of Asia in Russia's total exports of oil has gone up from 4% to 29% while in absolute terms exports to Asia have increased 7-fold. China is the main market that Russia has been selling more and more oil to and in 2016 it became the largest importer of Russian oil with a share of 19%. When it comes to natural gas that Russia is selling in Asia, most of it is going to Japan but only as LNG.
Diversification of the markets for Russian oil and natural gas is being achieved by expanding sales in Asia and several objectives are being attained through it. First of all, it allows Russia to wean itself off dependence on sales to the EU, traditionally the largest market for Russian energy resources. This is becoming increasingly relevant because of the western sanctions against Russia, including those to the oil and gas industry. Secondly, in the long term the European market for energy resources is not expected to grow and if Russia wants to ensure sustained growth in its energy exports it has to break into new markets. In this context, the Asian market offers huge opportunities. Thirdly, the resources of oil and natural gas that Russia still has left are mostly concentrated in the east and their development and supply to customers in Asia is more profitable.
The expert believes that the gradual reorientation towards the Asian market is also dictated by the future prospects of growth in demand for energy resources around the world. Oil consumption in China is expected to grow by 40% by 2040 and that is 200 million tonnes more oil while the country's net imports are going to grow even more as domestic production is expected to decline somewhat. The same trend is projected for India. In response to these developments, Russia is implementing a number of major projects to expand sales of its oil in the region. Emphasis is being put on expanding the capacity of the East Siberia-Pacific pipeline and the port infrastructure in the Far East. Additional amounts of oil to be sold in Asia will be supplied by exploring new deposits in Eastern Siberia and the Far East.
As for the prospects of more sales of natural gas, these have to do primarily with exports to China, which should amount to at least 38 billion cubic meters per year (starting in the early 2020s) with the launch of the Power of Siberia pipeline, which makes up some 20% of Russia's total natural gas exports. Increase in natural gas exports to Asia can also be achieved by selling more LNG from Yamal (the Yamal LNG project will be launched in December 2017) and a number of other promising LNG projects.