What awaits Russian oil, gas and coal in the years ahead

Alexey Gromov, Principal Director on Energy studies at the Institute for Energy and Finance, commented to Vzglyad on the validity of the preliminary draft of Russia's Energy Strategy for the period up to 2050 in terms of the Russian fossil fuels exports.

"If geopolitical miracles do not happen, and miracles cannot be included in the strategy, then in the long term, the volume of supplies to Europe will fall to a minimum level or stop completely in the event of sanctions. Currently, 27-30 billion cubic meters are supplied to Europe via the Ukrainian route and the Turkish Stream. The most optimistic scenario will allow us to keep half of this volume flowing through the Turkish Stream," Alexey Gromov says.

It is also impossible to count on Turkey as a regular buyer of Russian gas in the amount of 17-25 billion cubic meters, as it is now, with an absolute guarantee.

"Turkey hopes to reduce dependence on natural gas imports primarily through the development of its Black Sea natural gas fields, which may reach their design capacity after 2030," the expert notes.

According to him, the export of pipeline gas to the West (all of Europe and Turkey) will remain at the level of 25 billion cubic meters for all, which is about half of the volumes that are now going to the West. Plus, supplies to Belarus in the amount of 20 billion cubic meters will still remain. Total it is about 45 billion cubic meters in the western direction. And this is an optimistic option.

There is the Power of Siberia in the eastern direction, with a design capacity of 38 billion cubic meters per year, as well as a Far Eastern route of 10 billion cubic meters per year. "We are also currently supplying about 4 billion cubic meters to Central Asia, and there is a goal to increase supplies to 15-20 billion cubic meters," Gromov continues. Together with the western direction, it turns out that exports can amount to 108-113 billion cubic meters. This is only slightly higher than in 2023 – 99.6 billion cubic meters.

Where else can you find 60-70 billion cubic meters to achieve the target level of 176 billion cubic meters per year by 2030?

Probably, the calculation is, firstly, to preserve the Ukrainian transit of 15 billion cubic meters and the implementation of the Power of Siberia - 2 gas pipeline with a capacity of 50 billion cubic meters.

However, the transit of Russian gas through Ukraine is questionable. Firstly, the contract ends in December of this year. Secondly, due to the situation in the Kursk region, supplies may stop altogether at any moment.

Perhaps the Ministry of Energy is counting on a significant increase in supplies in the Iranian direction, Gromov believes. Recently, a Gazprom delegation visited Iran and signed a memorandum on the organization of pipeline supplies to South Asian countries through Iran. However, the details of this project are unknown.

Thus, the figures for pipeline gas are too high, and they are based on two projects that have not yet been confirmed for implementation – the Power of Siberia – 2 with China and the Iranian project, about which almost nothing is known at all.

As for the LNG forecast, it looks even more fantastic, experts say.

"It would be possible to talk about a six-fold increase in LNG exports by 2050 if the industry developed without sanctions in a free competition regime. But now it's unrealistic. We must prepare to work under the conditions of existing sanctions and, perhaps, prepare for new ones. We see the strongest opposition from the United States against new LNG projects in Russia. Arctic LNG-2 has already been subject to blocking US sanctions, and the US has made it clear that other new LNG projects will face the same fate. This will at least slow down their commercial operation, and at most force Russian companies to abandon a number of LNG projects for economic reasons,"  Alexey Gromov says.

The LNG export targets need to be seriously adjusted, Gromov concludes.

But the indicators for oil and coal, in his opinion, look quite realistic.

"The developers of the energy strategy probably expect continued growth in oil consumption in all major developing countries, including China. And it's possible. Because the onset of the consumption peak, after which the recession will begin, is constantly moving away. At first, the peak was expected in 2019, then it was shifted to 2025, and now they are talking more and more about 2030," Gromov explains.

However, the risks still exist. "The key risk is a decrease in oil demand in China after 2030 due to the movement towards the goal of carbon neutrality in 2060. However, it is possible that by the time China begins to curtail oil consumption, demand for it will begin to grow in other regions, including Africa," the expert does not exclude.

As for coal, Gromov believes that coal exports from Russia could be higher now if the capacity of railways in the East allowed.

"Therefore, the forecasts for an increase in coal production and exports are linked to the plans of Russia to expand the Eastern Railway landfill. The Chinese market will definitely be interested in Russian coal supplies by 2030. And again, there are other Southeast Asian countries that do not abandon coal," the expert says.