The prospects for the Russian oil and gas exports recovery

Alexey Gromov, Principal Director on Energy Studies of the Institute for Energy and Finance, commented on the prospects for the Russian oil and gas exports recovery to the Profile business magazine.

“At the prices we have today, the bulk of Russian oil is objectively sold for less than $60 per barrel, that is, below the price cap,” notes Alexey Gromov. In this case, we are talking about the so-called FOB price, that is, the price of shipment in Russian ports without taking into account the cost of insurance and transportation.

However, according to Alexey Gromov, by the end of the year the situation with oil and gas revenues should be improved somewhat, and the fall in annual terms will be 30-35%.

An insidious Turkish hub

“We gave the Turks a very good idea, because their country really occupies an advantageous position in terms of logistics,” Alexey Gromov says. “They can create a platform for trading not only Russian gas, but also Azerbaijani, Iranian, and, in the future, their own.”

Türkiye can also sell LNG as it has regasification terminals.

Is there power in Siberia?

The peak of blue fuel consumption in China is expected around 2030, Alexey Gromov told, after which gas consumption will stabilize, and possibly will decline. But the fundamental point is that the Celestial Empire will need Russian gas anyway. After all, the country is a major importer and purchases fuel from many suppliers: LNG from Australia, Qatar, the United States; pipeline gas - from Turkmenistan, Russia, Myanmar, etc. Beijing is interested in greater diversification of supplies in order to be able to switch from one seller to another depending on the political situation and economic conditions. But this means that the Chinese will demand from Moscow the most flexible terms of supply: if they want, they open the valve, if they want, they turn it on. That is, it is unlikely that Power of Siberia-2 will be able to operate at full design capacity.