Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, gave an interview to Novye Izvestia about the export of Russian LNG in terms of new foreign economic conditions.
Why the risk of losing the European LNG market is high for Russia, whether the country will be able to compete for exports to "friendly" countries in the future — in the interview with Alexey Belogoryev.
- By the end of 2022, Russia retained the fourth place in the world in terms of LNG exports, losing, albeit by a large margin, only to its already traditional competitors — Qatar, Australia and the United States.
Russia's share in international trade, according to GIIGNL, amounted to 8.24% or 32.1 million tons per year. Last year, Russia increased exports, according to the same data, by 8.3% or 2.5 million tons.
-The prospects for Russian LNG exports in the coming years depend mainly on two factors: the timing of the launch of the new Arctic LNG 2 plant and the likely imposition of an embargo by the EU.
This is partly due to the fact that last year the factories worked almost non-stop, maximizing production.
The timing of the construction of Gazprom's large Baltic LNG plant is also unclear.
Yes, Novatek remains relatively optimistic, assuring that it is ready to launch the first stage of Arctic LNG 2 in the winter of 2023/2024. But the next two parts will presumably exit with a noticeable delay.
In addition to serious challenges in terms of forced import substitution, a high risk of loss of the European LNG market creates big problems for the introduction of new large- and medium-tonnage liquefaction capacities in Russia.
All other projects under discussion, including the Murmansk LNG recently announced by NOVATEK, may come into operation only by the end of the decade or even next.
- The European Union is actively buying our LNG, but since March, referring to geopolitics, it threatens to do everything to close the "entrance" to Europe to Russian exporters. We are talking about restrictions without the introduction of new sanctions. Your forecast: will the EU abandon our LNG? And where then can Russia redirect exports?
-For a combination of reasons, the introduction of an embargo on Russian LNG at the level of the entire EU is still unlikely in the next two years, but looks almost inevitable in the perspective of 2026-2027.
As a result, in the case of redirecting supplies from Europe to any alternative markets (which have yet to be found), the delivery time will increase two to three times, and in winter, when moving eastward along the Northern Sea Route, perhaps even up to four to five times.
And the economics of most Russian LNG plants (except, of course, Sakhalin-2) is still focused on preferential supplies to the European market. The reason for this is quite understandable: the relative proximity of this sales market, and, accordingly, a short transport shoulder compared to supplies to any other regions.
In addition this means a sharp increase in the need for a tanker fleet, which is difficult to satisfy in the conditions of Western sanctions.
-Simply put, for the next ten years, the prospects for Russian gas exports, including LNG and pipeline supplies, look deplorable? The construction of the second gas pipeline to China, if such a decision is made, will also take 10-15 years.
-The economic return from LNG exports, especially for the state, will remain, according to most estimates, noticeably lower than pipeline gas supplies to Europe. And the demand for additional volumes of Russian LNG in "friendly" countries after 2027-2028 cannot be called guaranteed in any way: its sales markets will still have to be seriously fought for.
On the other hand, the consequences of sanctions, which have made the technological maintenance of factories more complicated and lengthy, are affecting.
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