Russian LNG, natural gas shouldn’t compete in export markets, Gazprom says

Russia should ensure its natural gas and LNG supplies do not compete in international markets, Gazprom said on Thursday, amid signs a local LNG rival is becoming increasingly important in the European market traditionally dominated by Gazprom.

Moscow has for years said its pipeline gas, which only Gazprom has a right to export, and liquefied natural gas (LNG), would never compete, with its LNG targeting mainly Asia and parts of Europe not served by natural gas pipelines.

However, Yamal LNG, led by Russia’s top private gas producer Novatek, shipped 33.5 million tonnes of LNG to Europe between 2018 and 2020, Refinitiv Eikon data showed, compared with 8.8 million tonnes sent to Asia.

Russia, home to the world’s biggest gas reserves and the second largest gas producer globally after the United States, aims to boost LNG output nearly threefold to 140 million tonnes in 15 years, to add to the gas it supplies the pipelines.

Some in the industry hope its LNG may come in handy as Europe aims to reduce greenhouse gas emissions in the years to come, with Novatek, oil producer Rosneft and Gazprom itself all planning to build new LNG plants later this decade.

Natural gas and LNG produce fewer emissions than some other fossil fuels, such as coal, although they are not as clean as renewable energy, such as wind and solar power.

“Gazprom supports development of the LNG sector in Russia to diversify sales’ markets … provided there is no competition between Russian gas suppliers externally,” it told Reuters in emailed comments.

Gazprom’s new LNG facility, to be built by the Baltic Sea in Ust-Luga, will not target pipeline gas buyers, the company said earlier this month.

Pavel Zavalny, the head of the energy committee in Russia’s lower house of parliament, or Duma, told Reuters this month that Moscow needed to speed-up development of its Arctic gas reserves before it is too late.

“There is an understanding that we are now in a stage of an energy transition and the biggest hydrocarbon consumers are aligning themselves with carbon neutrality goals,” he said. “To get most of these reserves, we need to move fast.”

Reuters