The Eastern Gas Program: Expectations and Realities of Russia

Abstract

The state and the prospects of implementation of major investment projects combined into the Eastern Gas Program have been analyzed. The terms of realization, the state of resources and the state of gas transportation system under the projects forming part of them are considered. It is shown that only one (Sakhalin) of four gas production centers foreseen in the program has an adequate infrastructure; the unifed gas transportation system has not been established, and the gas processing industry has received insuffcient development. It has been determined that the capacity of the pipeline makes up 70% of the total production volume and this is the factor limiting the development of the gas production and processing industry in the regions. The reasons for a change of the terms and conditions of the development of the projects of the Eastern Gas Program have been investigated. It is shown that the discrepancy in key goals and the actual state of gas industry in the eastern regions of the country is explained by the changing situation in the key gas markets, which determines the fnal economic effciency of the projects, the lack of the solution to long-term demand problems and stable sources of fnancing. The prospects of the development of the projects of the Gas Program and the risks of implementation for the Russian side have also been investigated. The article describes a dependence of the implementation of separate projects on the possibility of signing effcient international contracts with the countries of the Asia-Pacifc region and on the success of the strategy of formation of new export goods niches based on the in-depth processing of hydrocarbon raw materials. The consequences of creating the full-scale gas industry in Eastern Russia have been analyzed. It has been determined that the projects within the Program with a focus on the formation of the national export income have been implemented. It is shown that the projects within the Program do not ensure an accelerated development of the Eastern regions of the country because of the lack linkages between the projects and other branches of regional economy. Furthermore, the regions do not accumulate fnancial resources from the project implementation.