Russia's Pipeline Gas In Europe May Face Competition From Russian LNG - Think Tank


Russia's Pipeline Gas in Europe May Face Competition From Russian LNG - Think Tank

MOSCOW (UrduPoint News / Sputnik - 27th July, 2021) Russia, the world's largest pipeline gas exporter, may face competition from its own liquefied natural gas (LNG) in the European market, the Oxford Institute for Energy Studies said in a report on Monday.

The research institute has analyzed the available data of Russia's largest independent natural gas producer Novatek's Yamal LNG project. Having shipped its first LNG cargo in December 2017, the project was meant to focus on shipments to Asia - via the Northern Sea Route in the summer and via transshipment in Europe in the winter, the think tank noted. Large volumes of Yamal LNG cargoes, however, have increasingly remained in Europe.

"In 2019 in particular, the vast majority of Yamal LNG deliveries to North-Western Europe remained there, and the available data also suggests that while re-exports were greater in 2020, the volume of LNG that arrived from Yamal and remained in North-Western Europe was substantial enough to be materially competitive with Gazprom's pipeline supplies to those same markets," the report said.

The competition, however, may come from "LNG in general, not just specifically from Yamal," according to the institute.

"[I]f Gazprom suffers from that competition, then it would suffer whether the LNG cargoes were arriving from Yamal, the US Gulf Coast, Ras Laffan, or anywhere else," it added.

Novatek is the biggest private gas-producing company in Russia. Since 2017, Yamal LNG has been engaged in upstream, midstream and downstream activities in the Yamal Peninsula. The northwestern Siberia reservoir is producing increased outputs of LNG and natural gas. The field's proven reserves are estimated to be 926 billion cubic meters.

In June, Novatek CEO Leonid Mikhelson said that Yamal LNG may produce more than 20 million tonnes of liquefied natural gas per year.