Russian gas export strategy in Asia and competition with the Australian LNG projects

Abstract

The main objective is to understand whether liquefied natural gas from Russia and Australia will compete against each other in the world market, and which of them has more competitive advantages. The presentation elaborates on the potential of Russian gas exports to Asia. It assesses all outstanding projects and reveals their feasibility and potential. A special focus is on target markets: destinations of Russian LNG, its quantities and prices, and the situation around exports until 2030. There is only one operating LNG project in Russia – a facility in Sakhalin with two trains producing slightly over 10m tons per year; approximately 80% of the produce is exported to Japan. A new LNG plant is to be put into operation this year – it is Yamal LNG of 16.5m ton annual production capacity. Some 60% of the Yamal LNG produce has been contracted by portfolio players not indicating final importers. Therefore, it is important to understand where this LNG will be supplied to – Asia or other markets? The presentation will also describe options of monetization of Sakhalin gas, whether the LNG plant in Sakhalin will be expanded, and if plans of building Arctic LNG are feasible. Two scenarios of Russian exports to Asia will be presented. Projects stipulating construction of pipelines from Russia to Asia will be assessed with regard to their competition with LNG suppliers. It concerns the Power of Siberia gas pipeline that is under construction, as well as the Power of Siberia-2 and Sakhalin-Hokkaido projects. Moreover, the potential capacity of major gas consumers in Asia will be assessed with forecasts until 2030. Production costs of Russian gas and its delivery to consumers in Asia will be estimated, which will provide for examining its competitive advantages compared to LNG produced in Australia and America.