Valve is being shut off: what tests await the Russian gas industry next year

Alexey Gromov, Principal Director on Energy studies at the Institute for Energy and Finance, shared with the business magazine Profile his vision of the prospects for the Russian gas industry development in terms of increasing sanctions pressure.

Today, there is little doubt that Moscow and Kiev will not renew the transit agreement – at least by mid-November, there were no reports of any agreements in this regard. Meanwhile, Russia has long-term contracts for the supply of fuel to these countries. The issue with Austria and Slovakia will most likely be resolved through the additional loading of the Balkan Stream to its full design capacity, which is 15.8 billion cubic meters per year.

"Given that we have already transferred all the volumes of supplies for Hungary to it, about 2-3 billion cubic meters remain in the Balkan Stream for additional gas pumping towards Slovakia and Austria," Alexey Gromov explained.

According to him, after the termination of Ukrainian transit, Russian gas exports to Europe will decrease by 6-8 billion cubic meters per year, that is, by half. "The figures are not very large in terms of volume, but the money is substantial," the expert says, since the long–term contracts under which these supplies are carried out "are of a premium nature" and bring good income. However, the coming losses are practically a given that Russia cannot do anything about.

Alexey Gromov forecasts, "under the best-case scenario, Russian LNG will be present on the European market for another couple of years: 2025 and possibly 2026." Because in the next two years, a very serious increase in fuel supply from the United States and Qatar is expected. The latter promises to increase LNG production from 77 million tons in 2024 to 140 million tons by 2030. In this scenario, it cannot be ruled out that the new Washington administration will force the Europeans to abandon any gas cooperation with Russia as soon as possible and to comply with all sanctions restrictions as strictly as possible. We can see the implementation of this negative scenario as early as next year.

The main task for the coming years is to create our own tanker fleet and work out logistics schemes for the delivery of LNG from Russian sub–sanctioned projects to potential buyers. In particular, it is necessary to master the transshipment of liquefied natural gas in the open sea, as soon as European ports will be closed for this operation.

"I do not remember that such an operation was carried out in principle – this is also a serious technological challenge," Alexey Gromov says.