Russia abandons plans to catch up to US’s LNG production

The Russian Energy Ministry has dramatically lowered its prediction of the country’s future liquefied natural gas (LNG) production, according to the Energy Strategy 2035, extracts of which were cited by Interfax.

In autumn, Russian Energy Minister Alexander Novak and Novatek co-owner Leonid Mikhelson said that in the next 16 years Russia could be producing up to 140 million tons of LNG per year. In October, the Energy Ministry set a target of 100 million tons by 2035 in its energy strategy.

However, the final version of the document, submitted to the government in December, sets a far more modest goal. By 2024, the department aims to produce 46-65 million tons of LNG per year, and only 70-82 million tons per year by 2035.

The official prediction has thus dropped by around 30% in the space of three months, and is only half of the unofficially cited figures.

“Work is currently being done to design such major production in Russia’s Arctic zone as Arctic LNG-2 (capacity: 19.8 million tons) and Arctic LNG-3. The Arctic projects will be implemented using a platform of the gravitational type, produced at the shipyard in Murmansk,” the strategy states.

“Outside of Russia’s Arctic zone, there are plans to implement such major projects as the construction of the third technological line of the LNG plant of the Sakhalin 2 project (primary shareholders: Gazprom and Shell), the creation of a complex for processing and liquefying natural gas in the region of Ust Luga (realized by Gazprom and RusGazDobycha), and Far Eastern LNG (planned by Rosneft and ExxonMobil),” the Energy Ministry states.

The strategy shows that Russia is continuing to rely on gas pipelines for exporting its gas. By 2035, the country aims to increase its gas production by 25% to 924 billion cubic meters (bcm) per year. This is significantly more than what the Energy Ministry included in the previous version of the strategy that was published in summer – 757 bcm in the conservative scenario and 875 billion in the optimistic one.

In order to sell this gas, Russia will need to build new pipes. The 240 bcm capacity of its existing gas export pipelines will have to grow to 363 bcm by 2024 and 405 bcm by 2035.

The Russian Energy Minister expects the EU to remain the primary buyer, with an estimated 325 bcm going towards Europe. Deliveries towards countries in the Asia-Pacific Region are expected to grow to 38 bcm in 2024 and 80 bcm in 2035.

(C)UAWIRE 2019

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