HomeMediaLatest NewsEurope has limited the Russian LNG transit, but does not want to abandon it

Europe has limited the Russian LNG transit, but does not want to abandon it

Belogoryev Alexey M. Research and Development Director, Director of the Center for Energy strategic analysis and forecasting

Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, commented on the EU sanctions consequences against Russian LNG to the Delovoy Peterburg magazin.

“Currently, only the Sakhalin–2 LNG plant is fully provided with demand from Asian countries. Due to the special position of Japan and the proximity of South Korea and China. The plants in the Arctic and the Leningrad region are oriented towards Europe, and not only the existing ones, but also the new ones. This is unavoidable logistically — the distance to Europe is much shorter than to South and East Asia. To redirect these flows, three problems need to be solved. The first and probably the most painful thing now is to ensure the availability of our own fleet of gas carriers. To redirect the flow from Europe to South and East Asia, it is required to increase the fleet by about 3 times with the same transportation volumes. We need a lot of conventional gas carriers, without ice classes, and this, in my opinion, is now the most acute problem that will remain like this for more than one year, since Russia itself can hardly build such vessels, apart from the Zvezda complex, which is designed specifically for ice-class vessels. The second problem is the search for market niches. Currently, Russia exports LNG only to Europe and Northeast Asia, not counting literally single supplies to other regions. And from the end of 2025, we expect the global LNG market to move to a supply surplus, and Russia will have to compete fiercely with other players. And the third problem is contractual. The economy of the LNG industry is based on the fact that at least half of the plant's capacity should be contracted for the long term, 15-20 years ahead. If this is not the case, there are significant risks of underloading,” Alexey Belogoryev said.

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