Ministry of Energy: Russia can attract a fifth of the international LNG market by 2030
Russia maintains current plans for the volume of production of liquefied natural gas (LNG) by 2035 up to 120-140 million tons per year, First Deputy Minister of Energy Pavel Sorokin said at the St. Petersburg International Economic Forum (SPIEF–2022).
The plan for the production of LNG up to 140 million tons per year was estimated back in March 2021. It provides for the “leveling” of the conditions for state support for LNG projects implemented in mandatory climatic zones, regular monitoring of the construction of large-capacity production facilities, the development of incentives for geological exploration in the Arctic, and other measures . Sorokin stressed that, despite the anti-Russian assembly, the government does not abandon this plan.
In case of successful implementation, according to Sorokin, by 2030 Russia can attract 15–20% of the foreign LNG market, which by this time is about 700 million tons. Sorokin also noted that increasing LNG production to 80–90 million tons in year is possible only at the expense of the resource base of Yamal and Gydan, where the current Novatek project Yamal LNG is located (it produced 19.6 million tons in 2021). ) planned construction of new facilities.
At the same time, on June 17, Deputy Prime Minister Alexander Novak SPIEF-2022 reported that the economic subsidy proposal could promote the development of gas liquefaction technologies. He did not specify how much money will be spent on subsidies. “If today Russia has produced only 30 million tons of LNG, then in the near future 100 million tons per year will be produced,” Novak added. In turn, the co-owner and chairman of Novatek, Leonid Mikhelson, spoke at SPIEF-2022 that for import substitution in the LNG industry, it is necessary to finance R&D by 24 billion rubles. And without state support, according to the entrepreneur, “acceleration of the organization of import-substituting products for the production of LNG is impossible.”
A single LNG line, connected to the base of domestic equipment, is currently operating at Yamal LNG. But with the technology dubbed the Arctic Cascade, not everything is going smoothly. gradual development of the fourth stage of the enterprise by the fourth quarter of 2019, but a gradual increase in the frequency of development, which in Novatek is explained by the introduction and testing of its own gas liquefaction technologies. As a result, the fourth line of Yamal LNG reached its full capacity of 950,000 tons per year only in May 2021.
Today, there are only two large-scale LNG projects in Russia:Sakhalin-2”, which at the end of last year amounted to 10.4 million tons of liquefied gas, and Yamal LNG. The shareholders of Sakhalin-2 are “Gazprom“(50%), Shell (27.5%), Japanese Mitsui (12.5%) and Mitsubishi (10%). Yamal LNG is owned by Novatek (50.1%), Total (20%), Chinese CNPC (20%) and the Silk Road Fund (9.9%).
At the end of May, Mikhelson also said that the company is completing the construction of the first line of the Arctic LNG-2 project (the project involves the construction of three levels of capacity of 6.6 million tons per year each). “Novatek” owns 60% in the project, the remaining shareholders – French TotalEnergies, Chinese CNPC and CNOOC, as well as a consortium of Japanese Mitsui and JOGMEC – 10% each. Previously, it was assumed that the launch of the first phase of Arctic LNG – 2 should take place in 2023, the second – in 2024, and also in 2026. But in September 2022, Mikhelson stated that “Novatek“scheduled” approved appointments to new governments. He also emphasized that the concentration of equipment at Arctic LNG-2 is initially estimated at 50%, but in the next two or three years it was revealed at the level of 70-80% (Vedomosti wrote about this on May 20, 2022).
Against the backdrop of a special economic operation in Ukraine in 2022 and the tightening of a number of anti-Russian ranks of foreign partners obtained from Russian LNG projects. In particular, Shell announced plans for the Liberation project.Sakhalin-2and sell your stake. At the end of May, the Financial Times, citing sources, wrote that the Anglo-Dutch company was raising concerns on this issue with the participation of Indian representatives, including ONGC Videsh and Gail.
France’s TotalEnergies has decided to withdraw from the Arctic LNG-2 project, while estimating potential losses of $4 billion. On June 17, Upstream, citing a source, reports that its place in Arctic LNG-2, having bought out a 10% stake in the French, may be Saudi Aramco.
In addition, LNG projects in the Russian Federation may lose a serious face in the face of oilfield services company Baker Hughes. The company is already widely supplying equipment, and is also withdrawing its engineers from Yamal LNG, Sakhalin-2 and Arctic LNG-2, Kommersant reports on June 16, citing sources.
At the same time, Novak said back in March that Russia, if necessary, is ready to look for technological partners in Asia.
According to the International LNG Importers Group (GIIGNL), in 2021 the volume of global LNG imports will be 372.3 million tons. At the same time, the Russian Federation exports 29.6 million tons, ranking fourth after Australia (78.5 million tons), Qatar (77 million tons) and the USA (67 million tons). Thus, at the end of 2021, the Russian Federation turned out to be a little less than 8% of global LNG exports. LNG production in the Russian Federation, according to Rosstat, in 2021 amounted to 30.1 million tons.
Vasily Tanurkov, director of the ACRA corporate ratings group, believes that by 2030 Russia’s theory is within its power to arrest 15–20% of the international LNG market named by the Ministry of Energy. The replacement of Western enterprises and technologies, according to the expert, may slow down the development of Russian LNG projects in the next 1-2 years, but on the horizon of 8 years, the assigned goal is “achievable”.
Aleksey Grivach, Deputy General Director of the Environmental Security Fund, gives the forecast of the Ministry of Energy as “overly optimistic”. “So far, in the field of large-tonnage LNG selection, Russia has critical support from Western technologies and overcoming the danger, which is achieved through cooperation between all the advantages and verified actions to create competencies,” he exceeds.
Financial market expertBCS The world of investments” Yevgeny Mironyuk believes that the full line of Russian solutions for LNG production can be put into mass production within a few years. But the presence of imported components in it is completely absent, according to its purpose, without drugs. According to the expert, Russia could increase LNG production by 70 million tons per year, that is, more than 2 times the achievement of the level, in the next 10-13 years. “Unless new sanctions are introduced,” he says.