Turn to the East and «Schrodinger’s Gas»

The liquefied natural gas market in Russia and in the world is undergoing tremendous changes. It steadily grows, and our country should take one of the leading positions in it. The problems and prospects of the industry were discussed by experts and representatives of the business community at the Conference «Analysis and Priorities of the LNG Industry Development Areas» held as part of the St. Petersburg Gas Forum.

The Conference moderator, Pavel Sarafannikov, President and Chairman of the Board of the National LNG Association, noted that previously this industry was considered promising by far from everyone, but now it can become almost a key one in the Russian energy sector. However, its current state indicates the large number of flaws and gaps.

«In previous years, the Government of the Russian Federation has paid great attention to the industry: the roadmaps, resolutions, and support programs have been issued. But is this enough?», wondered Pavel Sarafannikov.

Vladimir Smelov, CEO of «Kriogaz» JSC, said that the company planned to build LNG plants in Pskov, Kaliningrad and Kingisepp 10 years ago. The idea was to export LNG to the West.

«Everything was great until recently. But at the end of December, together with our partners, the St. Petersburg auto fleets, we managed to diversify, and now the large amount of LNG to be previously exported, is supplied for refueling passenger buses. Almost all of them are LNG-powered here, we refuel about 60% of the buses”, noted Vladimir Smelov.

The speaker also told about new projects, in particular about the plant construction in Kemerovo, with a capacity of 80 thousand metric tons. The businessman explained that the company builds new plants only in case of realizing that demand for the products has formed. Besides, «Kriogaz» develops its own production technologies, without resorting to foreign borrowings.

Maria Belova, Director for Research at «Implementa» LLC, presented the analysis of changes in the global LNG market. Over the past two years, it has grown significantly due to sharp reduction in pipeline gas supplies to Europe. The volume of LNG exports to the European Union increased more than one and a half times from 2021 to 2022 – from 102 billion m3 to 165 billion m3.  The share of American supplies has increased especially, it has grown from 29 billion m3 to 70 billion m3. Maria Belova noted that the USA has become the major beneficiary of the situation.

“Last year, we did not see competition for LNG demand between Europe and China, as the latter was in lockdown. Now China is accelerating economically. If the cold weather comes to Europe and Asia this year, we may witness competition for spot LNG purchases, and this will have the strong impact on prices”, said Maria Belova.

Maria Belova also noted that, according to forecasts, the global demand for LNG will increase by 2 times by 2050. However, the supply will also grow. By 2030, it is planned to build up to 163 million metric tons of LNG capacity. Approximately 34% of this volume will be built in North America, and 24% will be in Russia.

Aleksander Klimentiev, First Vice-President of the Scientific and Expert Council of the National LNG Association, noted in his report that the industry needs legislative liberalization of the rules for exporting liquefied natural gas, for the purpose of its development.

Another important problem is «Schrodinger’s Gas». Despite the fact that Russia is a gas power, it cannot provide domestic consumers – chemical industries – with LNG, since almost all supplies go abroad. Thus, liquefied natural gas in Russia is like Schrodinger’s cat, which is both alive and dead.

«For any large company engaged in gas processing, the problem is the lack of gas in the Russian market in places where it is convenient and expedient to implement such projects», explained Aleksander Klimentiev.

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Turn to the East and «Schrodinger’s Gas»

The liquefied natural gas market in Russia and in the world is undergoing tremendous changes. It steadily grows, and our country should take one of the leading positions in it. The problems and prospects of the industry were discussed by experts and representatives of the business community at the Conference «Analysis and Priorities of the LNG Industry Development Areas» held as part of the St. Petersburg Gas Forum.

The Conference moderator, Pavel Sarafannikov, President and Chairman of the Board of the National LNG Association, noted that previously this industry was considered promising by far from everyone, but now it can become almost a key one in the Russian energy sector. However, its current state indicates the large number of flaws and gaps.

«In previous years, the Government of the Russian Federation has paid great attention to the industry: the roadmaps, resolutions, and support programs have been issued. But is this enough?», wondered Pavel Sarafannikov.

Vladimir Smelov, CEO of «Kriogaz» JSC, said that the company planned to build LNG plants in Pskov, Kaliningrad and Kingisepp 10 years ago. The idea was to export LNG to the West.

«Everything was great until recently. But at the end of December, together with our partners, the St. Petersburg auto fleets, we managed to diversify, and now the large amount of LNG to be previously exported, is supplied for refueling passenger buses. Almost all of them are LNG-powered here, we refuel about 60% of the buses”, noted Vladimir Smelov.

The speaker also told about new projects, in particular about the plant construction in Kemerovo, with a capacity of 80 thousand metric tons. The businessman explained that the company builds new plants only in case of realizing that demand for the products has formed. Besides, «Kriogaz» develops its own production technologies, without resorting to foreign borrowings.

Maria Belova, Director for Research at «Implementa» LLC, presented the analysis of changes in the global LNG market. Over the past two years, it has grown significantly due to sharp reduction in pipeline gas supplies to Europe. The volume of LNG exports to the European Union increased more than one and a half times from 2021 to 2022 – from 102 billion m3 to 165 billion m3.  The share of American supplies has increased especially, it has grown from 29 billion m3 to 70 billion m3. Maria Belova noted that the USA has become the major beneficiary of the situation.

“Last year, we did not see competition for LNG demand between Europe and China, as the latter was in lockdown. Now China is accelerating economically. If the cold weather comes to Europe and Asia this year, we may witness competition for spot LNG purchases, and this will have the strong impact on prices”, said Maria Belova.

Maria Belova also noted that, according to forecasts, the global demand for LNG will increase by 2 times by 2050. However, the supply will also grow. By 2030, it is planned to build up to 163 million metric tons of LNG capacity. Approximately 34% of this volume will be built in North America, and 24% will be in Russia.

Aleksander Klimentiev, First Vice-President of the Scientific and Expert Council of the National LNG Association, noted in his report that the industry needs legislative liberalization of the rules for exporting liquefied natural gas, for the purpose of its development.

Another important problem is «Schrodinger’s Gas». Despite the fact that Russia is a gas power, it cannot provide domestic consumers – chemical industries – with LNG, since almost all supplies go abroad. Thus, liquefied natural gas in Russia is like Schrodinger’s cat, which is both alive and dead.

«For any large company engaged in gas processing, the problem is the lack of gas in the Russian market in places where it is convenient and expedient to implement such projects», explained Aleksander Klimentiev.

More