Vladimir Putin has dismissed speculation that touted US gas supplies to Europe will impact Russia’s gas revenues, saying American firms will be better off concentrating on the Asian market.
“In order to set up exports of Liquefied Natural Gas (LNG),
infrastructure has to be created either side of the Atlantic, and
everyone understands that. This will take both, time and
money,” the Russian president told energy company executives
during an industry panel in St. Petersburg, which is hosting the
annual International Economic Forum.
“Meanwhile, the gas prices in the Asia Pacific region exceed
those in Europe by 1.6 times. It is self-evident that it will be
more profitable for US companies to fight for the premium Asian
market. No one wants to forego the opportunity to earn
money,” continued Putin.
Following the hydraulic fracturing boom in the US, which has seen
it overtake Russia as the world’s biggest gas producer,
Washington has reversed a long-standing restriction on gas
exports. Seven companies have given permission to export so far,
and multiple LNG terminals, necessary for transporting gas
overseas, are being built, with dozens more awaiting the go-ahead
from regulators.
Despite the significance of the trend, it does not appear likely
the US will replace Russia in the intermediate term. Last year,
sole Russian exporter Gazprom supplied 162.7 billion cubic meters
of gas to Europe, just under a third of its total demand.
To replace this, the US would have to divert a quarter of its gas
to Europe. Meanwhile, its first facility does not even open until
late next year, with the majority of the first wave of LNG
terminals scheduled to come online between 2017 and 2020.
“Russian gas prices are competitive, and most importantly
predictable, as they are based on tried and tested price-forming
methods,” said the Russian leader, referring to long-term
contract Gazprom signs with its customers, which link gas prices
to oil.
Despite brushing off American newcomers, Putin insisted that
Russia will not be left behind in the energy revolution, with its
emphasis on previously inaccessible shale gas and LNG terminals
to replace pipelines.
“We do not only plan to maintain and develop our position as
one of the leading energy exporters, but ride the crest of the
wave of qualitative changes in the industry,” said Putin.
Russia opened its first LNG terminal in Sakhalin in 2009, and is
scheduled to open at least four more in the next few years, with
all but one of them located on the east coast of the country.