Gustafson: Russian gas export policy’s shift to LNG matters

Russia is changing its natural gas export emphasis from dry gas through westbound steel pipelines to liquefied natural gas aboard tankers bound for East Asian markets, and South Korea, long-time Russian energy expert Thane Gustafson said.

“It’s fascinating to watch,” he said in remarks at Johns Hopkins University’s School for Advanced International Studies on Oct. 2. “You don’t turn an LNG tanker on a dime. But if you pay attention to where [Russian President Vladimir V.] Putin is pounding the table, Russia is looking east for new gas export markets. How quickly it accomplishes this pivot will be important.”

The shale gas revolution’s global growth since 2006 has triggered a wide range of changes which Russia is trying to address, according to Gustafson, a Georgetown University political science professor who also is senior director of Russian and Caspian Energy at IHS CERA. “We’re talking about a success story from the 1960s that is starting to change,” he said. “Selling dry gas through steel pipelines under long-term contracts isn’t working anymore.”

Gazprom, Russia’s state-owned gas company, adapted in some ways the last 30 years by taking downstream equity positions in European pipelines and distribution systems as far away as Great Britain, Gustafson said. But it’s facing resistance to new pipeline systems as Europe begins to diversify its sources and countries there consider importing LNG, he continued.

Meanwhile, Russia’s domestic gas market, which Gazprom executives long considered a graveyard because they had to sell gas nearly for free over several decades, has started to come to life as a market economy has grown and prices have risen, Gustafson said. Gazprom, which originally supplied 90% of Russia’s domestic gas needs, has seen its share fall to 70% as competition from independent producers has grown, he noted.

It also was slow to realize LNG’s potential as it developed supplies in the Yamal peninsula, giving it enough dry gas for the foreseeable future at a time when other producers globally turned their attention to shale gas, Gustafson said. Gazprom finally developed a maritime transportation unit with tankers which carry other countries’ LNG to customers in Europe and North America, he indicated.

But the company is going ahead reluctantly with construction of an LNG terminal at Vladivostok as competitors Rosneft and Novatek build facilities at Sakhalin and Yamal, Gustafson said. “Russia did not sleep,” he observed. “North America’s gas strategy was excellent. The question is whether Russia’s pivot to selling LNG to Japan, Korea, and China will be fast enough.”

Meanwhile, Gazprom announced that directors of its South Stream gas transmission project approved a detailed construction schedule, endorsed the project’s long-term budget, and confirmed during a meeting in Paris that South Stream’s first offshore line will be commissioned before yearend 2015.

Gazprom Export and South Stream Transport BV also signed a gas transmission agreement at the Oct. 2 meeting, Gazprom said. It is constructing the pipeline to ship gas across the Black Sea to Central and Southern Europe, it said.

Contact Nick Snow at nicks@pennwell.com.

Related Articles

Seven Group buys into Beach Energy

02/03/2015 Media group Seven Group Holdings, Perth, has bought 13.8% of Adelaide-based Beach Energy Ltd. through share purchases fuelling speculation of a pos...

Karve joins Cobalt for Cameia development

02/03/2015 Shashank V. Karve has joined Cobalt International Energy Inc. as executive vice-president in charge of development of deepwater Cameia oil field on...

MARKET WATCH: NYMEX crude oil stays positive on lower rig count

02/03/2015 Oil prices on the New York and London markets closed higher Feb. 2 on positive momentum generated by a falling US rig count, suggesting cuts in pro...

Obama’s proposed fiscal 2016 budget recycles oil tax increases

02/02/2015 US President Barack Obama has proposed his federal budget for fiscal 2016 that he said was designed to help a beleaguered middle class take advanta...

MOL absorbs Eni’s Romanian retail assets

02/02/2015

MOL Group, Budapest, has completed the acquisition of Eni Romania, including 42 service stations to be rebranded under the MOL name.

CNOOC subsidiary inks deal for grassroots refinery

02/02/2015 Hebei Zhongjie Petrochemical Group Co. Ltd., a subsidiary of China National Offshore Oil Corp. (CNOOC), has entered into a $700 million agreement w...

Pessimism mounts over UK offshore industry

02/02/2015

Pessimism about the UK offshore oil and gas industry is gaining momentum.

EnLink agrees to purchase Coronado Midstream for $600 million

02/02/2015 EnLink Midstream has agreed to acquire Coronado Midstream Holdings LLC, which owns natural gas gathering and processing facilities in the Permian b...

Antero trimming, delaying Marcellus drilling

02/02/2015 Antero Resources Corp., Denver, has announced a $1.8 billion budget for 2015, which is down 41% from 2014. The independent said it plans to defer c...
White Papers

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...

Accurate Thermo-Fluid Simulation in Real Time Environments

The crux of any task undertaken in System Level Thermo-Fluid Analysis is striking a balance between ti...

6 ways for Energy, Chemical and Oil and Gas Companies to Avert the Impending Workforce Crisis

As many as half of the skilled workers in energy, chemical and oil & gas industries are quickly he...
Sponsored by
Available Webcasts


Prevention, Detection and Mitigation of pipeline leaks in the modern world

When Thu, Apr 30, 2015

Preventing, detecting and mitigating leaks or commodity releases from pipelines are a top priority for all pipeline companies. This presentation will look at various aspects related to preventing, detecting and mitigating pipeline commodity releases from a generic and conceptual point of view, while at the same time look at the variety of offerings available from Schneider Electric to meet some of the requirements associated with pipeline integrity management. 

register:WEBCAST



On Demand

Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


US Midstream at a Crossroads

Fri, Mar 6, 2015

Oil & Gas Journal’s Mar. 6, 2015, webcast will focus on US midstream companies at an inflection point in their development in response to more than 6 years shale oil and gas production growth. Major infrastructure—gas plants, gathering systems, and takeaway pipelines—have been built. Major fractionation hubs have expanded. Given the radically changed pricing environment since mid-2014, where do processors go from here? What is the fate of large projects caught in mid-development? How to producers and processors cooperate to ensure a sustainable and profitable future? This event will serve to set the discussion table for the annual GPA Convention in San Antonio, Apr. 13-16, 2015.

This event is sponsored by Leidos Engineering.

register:WEBCAST


The Future of US Refining

Fri, Feb 6, 2015

Oil & Gas Journal’s Feb. 6, 2015, webcast will focus on the future of US refining as various forces this year conspire to pull the industry in different directions. Lower oil prices generally reduce feedstock costs, but they have also lowered refiners’ returns, as 2015 begins with refined products priced at lows not seen in years. If lower per-barrel crude prices dampen production of lighter crudes among shale plays, what will happen to refiners’ plans to export more barrels of lighter crudes? And as always, refiners will be affected by government regulations, particularly those that suppress demand, increase costs, or limit access to markets or supply.

register:WEBCAST


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected