New challenges and opportunities for the Russian liquefied natural gas (LNG) industry were analyzed by the market participants at the DEVELOPMENT PROSPECTS FOR THE RUSSIAN LNG SECTOR IN TODAY’S ECONOMIC REALITY session, which took place on October 9 in ExpoForum during the St. Petersburg International Gas Forum 2024.
According to Kept consulting company, the global LNG market brings together 20 manufacturing companies and 51 consuming companies, and it is one of the most dynamic energy markets in the world. LNG consumption across the globe is increasing faster than of natural gas in general. From 2010 to 2023, it rose up by 80%, which is about 15% from the global consumption of gas, whereas natural gas consumption increased by 27%.
“In the conditions of uncertainty, the LNG market is one of the most dynamically developing markets in the world,” said Maxim Malkov, Ph. D. in Economics, Partner and Head of Oil & Gas at Kept Consulting Company.
As reported by Kept, as long as conservative evaluation methods are used, new facilities capable of 120+ bln cubic meters can be introduced by 2030. “The forming new structure of the global LNG market encompasses both new challenges and unevident possibilities for Russian manufacturers,” Mr. Malkov stated.
In the current situation, major plans for LNG market development can get offset because of technological restrictions. “I am absolutely positive that technology-related issues will be solved, but it will take time. The LNG market is not about countries — it is about companies who are developing new strategies, and every 6 months of delay complicate reaching out for this market. Right now, it is time to establish a system of global network structures of our own, as we will have to sell LNG we’ve produced,” mentioned Stanislav Zhukov, D. Sc. in Economics, Associate of the Russian Academy of Sciences and Deputy Director for Research at the Primakov National Research Institute of World Economy and International Relations of the Russian Academy of Sciences.
“Indeed, Russia lacks technological opportunities. We have to deal with the sanctions and either take the path other countries covered in 20 to 30 years but do it in our own way, or use the technologies that are unverified and untested. Both options seem to be inadvisable. That’s why we should not only look to the external market, but also concentrate on the potential growth point at the local gas market, which are oil and gas conversion, and gas engine vehicles (GEV). Today, the GEV market capacity reaches about 10%, which is unduly low. It can be 30%,” said Sergey Romanov, D. Sc. of Economics, Professor, and Deputy CEO of the Russian Energy Agency associated with the Ministry of Energy of the Russian Federation.
Kept analyzed prospects of LNG industry development and discovered that it can follow two vectors — the offshore and the continental ones. As far as the offshore strategy is regarded, it is about dealing with the technological gap and successful competition with overseas manufacturers, which seems to be extremely challenging at the current stage. On the other hand, the continental strategy is a brand new one, which includes formation and development of the new market of low-capacity LNG in Eurasia. The key contributory factor is high potential of gas mining in Russia, as well as availability of technologies and competences of our own (we have such factories that are operated effectively), plus high potential of gas demand growth in the Eurasian countries.
“I don’t think we are going to make it into the on-going spree of the world’s LNG sector extension, but if we prepare our technologies and resource base, we can enter the next one, and do it powerfully and finely,” concluded Nikita Illeritsky, Ph. D. in Economy, Expert in Development of the Services for Oil and Gas Companies at Kept Consulting Company.