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Russia will become one of the world’s three largest producers of liquefied natural gas (LNG) in terms of output in five to eight years, a senior consultant with Russian independent energy advisor VYGON Consulting, Ekaterina Kolbikova, has told Sputnik.
“In [a period from] 2027-2030, Russia will become one of the top three countries in terms of gas liquefaction capacity, outrunning Australia,” Kolbikova said.
Australia, Qatar and the United States are currently leaders in terms of capacities for gas liquefaction. Moreover, Qatar and the US have clear plans for further expansion of the production of liquefied gas. According to the US Department of Energy, the US will reach first place in terms of gas liquefaction volumes by the end of 2022. US companies are expected to produce 13.9 billion cubic feet (393.6 million cubic meters) of LNG per day, Australia is expected to produce 11.4 billion cubic feet and Qatar10.4 billion cubic feet.
Russia is currently in fourth place.
“Russia does not solely rely on gas distributed through pipelines, on the contrary, according to our estimates the proportion of LNG in [Russian] export will rise from 16% in 2020 to 28% in 2025 and up to 33% in 2030 largely due to gas monetisation in regions that are remote [from the unified gas supply system]”, Kolbikova said.
Russia’s business strategy is different from the one in the US, the consultant added.
“To implement an LNG project [in Russia], it is necessary to find an additional source of funding and ensure a profit-making capacity of investments at a level of at least 15% throughout the entire cycle from production to sales. This is a difficult task given the uncertainties of the resource base, external markets and the regulatory environment”, Kolbikova said.
Meanwhile, US companies rely on more affordable long-term funding so they need to cover only tolling fees (operating expenses for the process of gas liquefaction). All other risks, including the cost of gas extraction and its sale, fall on the shoulders of customers, the consultant concluded.
