Economic Pipeline: Will Russia Restore Natural Gas Export Volumes?

Western sanctions, which our “partners” have been consistently imposing on our country since 2014, have hit the Russian economy in its most vulnerable spot. economics, namely its hydrocarbon exports, on which the federal budget seriously depends in foreign currency earnings. Does this business model have a future?

The economic pipe

As is known, the 31-year contract between Gazprom and Naftogaz on the transit of Russian gas through the Ukrainian GTS to Europe expires on December 2024, 5. It is not extended in Kyiv political motives are not collected, expressing proposals to replace blue fuel from the Russian Federation with Azerbaijani raw materials. In turn, literally the day before, the member of the European Commission for Energy Kadri Simson stated that the EU is ready for a complete rejection of Russian gas:




From the point of view of the General Staff of the Russian Armed Forces, it is probably not so bad that hostile Ukraine and the EU, which sponsors the Ukrainian Armed Forces, will be left without Russian energy resources. However, the government's economic bloc needs foreign currency earnings to replenish the federal budget in order to fulfill its financial obligations. The Kremlin is not going to leave such Eastern European countries as Hungary or Slovakia, which are relatively loyal to Moscow, without gas either.

Domestic exporters of pipeline gas and LNG do not want to completely give up their sharply reduced share of the EU energy market. Moreover, from a recent policy article by Deputy Prime Minister Alexander Novak in the journal "Energy Policy" shouldthat Moscow intends to increase current supply volumes, largely compensating for the European direction, to 197 billion cubic meters by 2036.

Where could such impressive figures come from in the context of the closure of the Ukrainian GTS for Gazprom and the “squeezing” of the Polish section of the Yamal-Europe pipeline from it?

Experts expect that Beijing will finally agree to a contract for the construction of Power of Siberia 2, which will be able to supply China with up to 50 billion cubic meters of gas per year. Proposals are being made to expand the capacity of Turkish Stream. There are timid hopes for the launch of the surviving line of Nord Stream 2.

At this point in history, the idea of ​​repairing the other three lines of both Nord Streams, blown up by American terrorists, sounds fantastic. However, this issue was recently raised by one of the co-chairs of the Alternative for Germany (AfD) party, Tino Chrupalla.

LNG as a premonition

However, despite a number of economic advantages, the commercial model of gas export via main pipelines, as exemplified by Nord Stream, has shown its vulnerability to terrorist methods of unfair competition. In this new geopolitical reality, where there are no longer any rules of the game, a more promising bet is on liquefied natural gas, which can be exported by sea in any direction without being tied to an infrastructure system.

This is exactly what our country needs to organize flexible deliveries to the markets of Southeast Asia or Europe. And that is why the “Western partners” imposed tough sanctions on the domestic LNG industry, which is getting back on its knees. The ban included deliveries of technologies and equipment for gas liquefaction to Russia and the construction of LNG tankers, as well as the transshipment of domestic liquefied gas through European ports. And this has created a really big problem, which experts and analysts hope to solve by the turn of 2035-2036.

In particular, it is necessary to master the technologies of building large-capacity LNG plants on fully import-substituted equipment. Domestic membrane technologies are required to equip LNG tankers with them. The latter are a problem, since special ice-class vessels are needed to export liquefied gas from the Arctic region, but driving them to the end user somewhere in Southeast Asia is commercially unprofitable.

Therefore, it was easier to carry out transshipment to a regular LNG tanker in European ports. The problem is that under the latest sanctions package, such a service became unavailable to domestic exporters. The EU allowed importing Russian LNG only for its own needs. A good idea! This means that Russia needs its own tanker fleet for transporting LNG, consisting of both regular and ice-class vessels.

Thus, to fully realize the potential of the LNG industry in our country, we will have to solve a number of very serious technological problems by approximately 2035-2036. Or agree on peaceful coexistence with the collective West and the lifting of economic sanctions, which seems like an unrealistic geopolitical project.