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

API to issue recommended practice to address pipeline safety

07/01/2015 The American Petroleum Institute expects to issue a new recommended practice in another few weeks that addresses pipeline safety issues, but the tr...

Shell Midstream Partners takes interest in Poseidon oil pipeline

07/01/2015 Shell Midstream Partners LP has completed its acquisition of 36% equity interest in Poseidon Oil Pipeline Co. LLC from Equilon Enterprises LLC, a s...

Shell makes FID on Appomattox deepwater development in Gulf of Mexico

07/01/2015 Royal Dutch Shell PLC has taken a final investment decision (FID) on the Appomattox deepwater development, authorizing construction and installatio...

MARKET WATCH: Oil prices decline as US crude inventories post first gain in 9 weeks

07/01/2015 Oil prices on July 1 surrendered much of their gains from the day before after the release of a government report showing the first rise in US crud...

Woodside-led Browse FLNG venture enters FEED phase

07/01/2015 The Woodside Petroleum Ltd.-led Browse LNG joint venture has entered the front-end engineering and design phase for a floating LNG (FLNG) developme...

FWS issues Shell letter of authorization on Chukchi Sea lease

07/01/2015 The US Fish & Wildlife Service issued Shell Gulf of Mexico Inc. a letter of authorization (LOA) related to the potential disturbance of polar b...

USGS: Water usage for fracturing varies widely across shale plays

07/01/2015 The volume of water required to hydraulically fracture wells varies widely across the country, according to the first national analysis and map of ...

Case for Keystone XL has grown stronger, TransCanada tells Kerry

06/30/2015 Canada is taking strong steps toward combating climate change, and the proposed Keystone XL pipeline crude oil pipeline remains in the US national ...

Forum extends study of subsea integrity

06/30/2015

Work by an industry forum called SURF IM Network, which studies oil and gas subsea integrity management, has been extended by 3 years.

White Papers

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

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
Available Webcasts


The Resilient Oilfield in the Internet of Things World

When Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.

register:WEBCAST



On Demand

Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors

register:WEBCAST


Driving Growth and Efficiency with Deep Insights into Operational Data

Wed, Aug 19, 2015

Capitalizing on today’s momentum in Oil & Gas requires operational excellence based on a clear view of what your business data is telling you. Which is why nearly half* of oil and gas companies have deployed SAP HANA or have it on their roadmap.

Join SAP and Red Hat to learn more about using data to drive process improvements and identify new opportunities with the SAP HANA platform running on Red Hat Enterprise Linux. This webinar will also show how your choice of infrastructure impacts the performance of core business applications and your ability to achieve data-driven insights quickly and reliably.

*48% use SAP, http://go.sap.com/solution/industry/oil-gas.html

register:WEBCAST


OGJ's Midyear Forecast 2015

Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Emerson Micro Motion Videos

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