Murmansk LNG: fog is dissipating

An interview with Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, about the new scheme for the Volkhov-Murmansk gas pipeline construction (No. 42, October 16-22, 2023), was published in the Monocle magazine (until 10/13/2023, called "Expert")

Alexey Belogoryev comments on the situation around the project:

- The advantage of NOVATEK is that it can build a gas pipeline at the time it needs, regardless of Gazprom's investment plans and limited capabilities. This will allow it to earn money later on the export of LNG and, probably, monetize the gas of its own production. The gas pipeline is only part, and far from the most expensive, of a large project within the ambitious expansion of the company's business. Do not forget that maintaining the operation of such a large gas pipeline is a big hassle and expense, and Novatek may even be glad that it will not hang on its balance sheet for decades.

— Currently, NovaTEK does not have the right to export LNG from the Murmansk project. How does the company plan to overcome this regulatory hurdle?

— I would not be surprised if in this case it’ll be a targeted solution related only to the Belokamenka plant, which will make the policy in the field of gas exports even more like a patchwork quilt.

A more systematic and decisive option was proposed by NovaTEK itself in June: to untie in the Gas Export Law the right of a subsoil user to export LNG from a specific field licensed for this export. Sooner or later, it will still have to be done, especially if we think of developing exports from medium- and low-tonnage LNG plants, which is largely stalled precisely because of the monopoly of Gazprom Export. Gazprom's counterargument is as follows: in this case, an uncontrolled amount of gas, not provided with a resource base, can be exported, which can lead to a shortage in the domestic market and (or) to an increase in domestic prices. But the argument, it seems to me, is not entirely convincing: firstly, there are still not so many promising plants that such an imbalance could not be foreseen, and secondly, it is not entirely clear what is the fundamental difference between this situation and the export of pipeline gas, for which Gazprom also often used gas without bindings to a specific deposit. In general, it is impossible to indefinitely isolate LNG production from the domestic gas market. And it is not obvious whether it is necessary.