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Europe with its greed brought down the Asian LNG market

22 November 2022

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

Alexey Belogoryev, Deputy Principal Director on Energy Studies of the Institute for Energy and Finance, commented to Pravda.ru on the impact of high demand for LNG in Europe on the LNG shortage at the world market and on the dynamics of Russian LNG exports in 2022.

According to him, Russia does not suffer in this situation. According to preliminary data, Russian LNG exports are growing noticeably, by the end of the year, an increase of 8-9 percent compared to last year's level is possible. The Yamal LNG and Sakhalin-2 plants are operating at their design capacity. Therefore, in terms of Russian exports, Russia definitely does not suffer.

“Moreover, supply prices have also increased. Therefore, Russia can hardly be considered a victim. We have significant problems related to technological sanctions, that is, with the construction of new projects, in particular, with the construction of the Arctic LNG 2 and Baltic LNG plants. But that's a different story," the analyst said.

He noted that Europe this year showed an unexpectedly high demand for LNG, which was not included in the plans of suppliers, including long-term investment plans. And, accordingly, there was simply not enough free LNG on the market to supply Europe. And this LNG was practically lured away from Asia by Europeans from Asian consumers, offering higher prices.

And as a result, they are left without LNG, that is, there is a shortage in South and Southeast Asia, and in some countries there is an acute shortage of LNG. First of all, the electric power industry and industrial production suffer. And hence the high prices, shortages - everything leads to a slowdown in economic growth.

“But in fact, not only poor countries, but even relatively prosperous ones, like China, have also sharply reduced their LNG consumption this year, simply not being able to compete with Europe. Indeed, the EU countries can be blamed for creating an LNG shortage in the world market, and not only this year, but in the next two years too," Belogoryev summed up.

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