Developing LNG technologies is a strategic objective for Russia’s natural gas sector

7 june 2016

In the past 15 years there has been a significant increase in the exports of petroleum products from Russia, including as a result of the emergence of new major markets, primarily in Asia, according to the Analytical Center's experts in their new energy bulletin titled Development of Oil Transportation.

Experts are convinced that such growth in sales required development of new delivery routes and infrastructure in the form of pipelines and port terminals for exporting oil. Another factor that contributed to changes in the export transportation configuration of Russia has had to do with attempts by Russia to reduce its dependence on transit across the Baltic states and Ukraine. At the moment, key projects to develop transport infrastructure in the oil industry are being implemented to ensure external demand: this applies to both oil and petroleum products, experts believe.

In their opinion, construction of new and expansion of existing pipelines for transporting oil and petroleum products is necessary, first of all, in order to further reduce Russia’s dependence on transit deliveries and for the development of port terminals and the existing domestic pipeline infrastructure (North and South product pipeline projects). This should also help to expand the existing main pipelines in the country’s east (East Siberia and the Pacific) and build new oil pipelines to connect new oil fields with East Siberia and the Pacific regions.

As for maritime deliveries, this sector has ended up among the industries that have managed to improve their financial performance as a result of falling global oil prices, the experts think. This happened not just because freight companies were able to reduce their fuel costs but also as a result of rising demand for oil and petroleum products, which in turn boosted demand for oil and petroleum products Experts are also confident that development of LNG technologies is a strategic objective for Russia’s natural gas industry, but first the lag that currently exists in this field has to be overcome. LNG as an option for delivering natural gas from Russia for a long time was regarded as a complicated ‘toy’; projects were often postponed but now for a variety of reasons LNG has become vital, especially if Russia is to successfully compete after our pipeline contracts expire, experts point out.

The bulletin also touches upon the issues of climate change: on this point the experts believe that a lot depends on the Asian countries where half the electricity produced is generated by coal-fired power plants. To prevent further climate change, power generation must switch from coal to natural gas, especially in such places as India and China, the specialists are sure. But coal is cheaper and the countries in question often have ample coal reserves of their own, which means that reducing its role in energy generation there through restrictions and promotion of NG projects is going to be difficult and is bound to take a long time, experts believe.

For more see the bulletin Development of Oil Transportation

For other issues of the energy bulletin see the Publications section.