Historically, Gazprom has monopolized all gas exports in Russia. Complete control over gas sales to both east and west did not incentivize Gazprom to explore new ventures in LNG projects. Instead, the company focused on the development of a conventional pipeline network – including the Nord Stream, South Stream and East Siberia-Pacific Ocean pipelines. Consequently – in terms of the LNG market – Russia is lagging behind other global gas producers, such as Australia or Qatar who have heavily invested in infrastructure over the past decade.
Given Russia’s extensive gas reserves, the country has the potential to be a leading LNG exporter. Recent landmark changes to the country’s operating environment may finally allow for this potential to be realized – with amendments to gas export law expected to challenge Gazprom’s gas monopoly. Russia’s oil & gas production giant Rosneft, as well as country’s largest independent gas producer, Novatek, have gained licenses to export LNG independently from Gazprom and are pushing projects forward.
Novatek’s Yamal development is a key example, prospects here have been boosted by both a financial injection from China (3.6bn EUR) and changes in the Russian gas export landscape. The project is a potential game changer for gas export and is expected to come onstream by 2018 with three (5.5 mmtp) trains.
DW expects both LNG and pipeline exports from Russia to Asia to increase significantly in the mid to long term as the country reduces its reliance on pipeline gas exports to Europe. Growing demand for natural gas in Asia will likely incentivize Russian players to continue to invest in liquefaction for export. Novatek has recently announced plans for new Arctic LNG plants to expand production in the region, with a second plant in the Gydan Peninsula.
With these new projects, Russia is positioning itself to be a serious competitor to leading LNG producers. The country’s vast gas reserves and geostrategic position place Russia in a unique position to meet the growing demand for gas in both Eastern and Western hemispheres.
Iva Brkic, Douglas-Westwood London
