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Russian LNG: Becoming a Global Force
The perception of Russian LNG industry has been transformed over the past few years. In the 1990s and 2000s it was synonymous with delay and indecision as Gazprom announced and then postponed or cancelled a number of projects, including Shtokman, Baltic LNG and Vladivostok LNG. A transformational moment arrived in December 2013, however, when the Russian government announced a limited opening of LNG development to competition from third parties. Novatek and Rosneft jumped at ths opportunity, with the former leading the way in its development of the Yamal LNG project and surprising the gas world by bringing it online at the end of 2017 both on time and on budget.
Since then, the Russian government has recognised development of LNG as a significant political and commercial priority, and this paper seeks to analyse how this may be achieved as a vital part of the country’s overall gas export strategy. Russia’s gas pipeline exports will continue to be dominated by Gazprom, but the debate within the EU over dependence on Russian gas and Russian pipeline infrastructure clearly demonstrates the political difficulties that this can entail. In contrast, LNG offers more flexible access to a global market that is rapidly expanding, especially in Asia, and although politics can still play a role the increasing liquidity of the LNG market offers wider diversification options. As this paper details, Novatek seems to have become the Russian LNG champion, and has aggressive growth plans over the next decade, but Rosneft and Gazprom also have new projects planned which could make Russia one of the four largest LNG exporters in the world by the middle of the next decade.
This paper examines how realistic these objectives are, which projects will be key in achieving Russian corporate goals and how Russia’s overall LNG strategy is set to develop. The conclusions would certainly suggest that, although cynicism about Russian LNG over the first 25 years of the post-Soviet era was largely justified, it may now be time to acknolwedge that the country is set to become a major player in the industry.
