Russia’s LNG exports to grow by 9% this year having reached the capacity limit — expert
Excess of facilities and decrease of prices expected by 2026
Although the situation in the LNG market is favorable in 2022, the growth of exports from the Russian Federation is limited by the lack of facilities. With the excess of facilities expected by 2026, the prices will decrease, which will negatively affect the margin of supplies, particularly due to shifting from the EU to the markets of less wealthy Asian countries. That is the opinion of Alexey Belogoryev, representative of the Institute of Energy and Finance, who spoke at the international forum Gas of Russia 2022 in Moscow.
According to him, the deficit in the LNG market will remain for the coming two or three years, and “by 2026, perhaps, the market will be balanced and will even have excessive capacity.” The current high and unstable prices have a negative impact on the demand in Asian countries, most of which buy gas on the spot market creating risks for investment processes and long-term contracts, says the expert.
According to him, LNG from the Russian Federation is in great demand in the market today and it will be until 2025, “but we cannot take advantage of this opportunity since we have no large volumes of LNG,” he says. - This year, the increase of about 9% is due to operation of facilities above the design level. Next year, a slight increase will be driven by bringing the Portovaya facility to the design capacity. Then everything depends on the Arctic LNG 2 project, but it is still not clear if it will be put into operation as scheduled in 2024. Apart from Arctic LNG 2, international forecasts until 2030 include no projects on Russian LNG increase. Amid technological sanctions, no one can measure Russia’s ability to use the key equipment of domestic origin. NOVATEK avoids these questions. Let's hope for success, it is time that is in question,” he says.
“Today, we are missing a good opportunity while after 2025 when the market will probably see a surplus we will have to supply gas at lower prices, which should be taken into account in the economics of projects. By this time, we will probably be able to recover the export volume of gas including LNG of 2021 level. The question is how marginal those supplies will be. We are used to supplying gas mainly to very rich countries - the EU, Japan, Korea, while the markets opening up for us today in the countries such as China want to buy at a much cheaper price.”
