Russian need to open new gas export directions

28 may 2015

"In 2014 and the beginning of 2015 in the economy and power industry of Russia there were new challenges which could limit gas industry development, including the export of natural gas. The Delay of GDP rates of growth, considerable decrease in the world prices for oil, sanctions against Russian oil and gas companies and strengthening of the competition in regional markets of gas concern to them," said the expert of the Analytical Center Alexander Amiragyan, speaking at the IV International Forum "Yamal Neftegaz 2015".

In the report "Challenges for the Russian gas export in new economic and power realities" Mr. Amiragyan placed emphasis on existing problems and new challenges which began to be shown in the Russian gas industry, and first of all those concerning the gas export.

According to the expert, "the decrease in the world prices for oil had a negative impact on energy export indexes: following the results of 2014 in comparison with the previous year the decrease of the crude oil rate was 11%, og natural gas – 18%. Yet we have not experienced the influence of low oil prices on the Russian gas price in 2014".

The expert mentioned main challenges for the Russian gas export. Firstly, it is the stagnation of the Russian gas purchases volume in Europe and the aspiration of the European Union to further decrease of its dependence on Russia. There is much tension around the issue of gas transit through Ukraine volumes of which were considerably reduced due to development of alternative routes. Secondly, in the long term in the world the implementation of a number of large projects in the sphere of liquefied natural gas (further – LNG) is expected. Firrst of all it will happen in Australia, and that will strengthen the competition in the LNG Asian market which is the most perspective sales market for the Russian gas. That can create a gas surplus and will entail strengthening of the producers' competition and reduction of LNG prices in the Asian market. Thirdly, the European export direction expects the increase in the competition by means of the Azerbaijan projected gas supply, and possibly the supply from Turkmenistan and Iran.

According to forecasts of the International Power Agency, world consumption of natural gas till 2040 will grow more than by one and a half times, and China (+200 billion cu m of pure import), the European Union countries (+150 billion cu m) and India (+80 billion cu m) will be drivers of growth. In the long term Russia remains the largest exporter of natural gas in the world, however for strengthening of positions it is necessary to actively operate in new trade markets and to hold our ground on traditional export directions.

"One of opportunities for building upour gas export in the long-term is the LNG trade which advantage is flexibility and deliveries' range. The world market of LNG stagnated in 2012-2014 due to the lack of capacities for production. However in the long term up to 2018 it is planned to put into operation about 100 million tons a year, and that will increase world volumes more than by a third. About 11 million tons of gain will come to Russia, and by 2018 its share in world capacities of LNG can grow from 3 to 5% due to implementation of the "Yamal LNG project," said Mr. Amiragyan.