BAKU, Azerbaijan, July 5. It would take at least a decade to ramp up Russian gas supplies to Asian markets to a level close to its 2021 exports to the European Union (155 bcm), Trend reports with reference to the International Energy Agency (IEA).
“It would also necessitate the development of new gas export infrastructure and require significant capital investment at a time when Russia’s access to capital markets and energy technologies is restricted by the various sanction regimes,” reads the latest IEA report.
The report reveals that Russia’s gas deliveries to Asian markets could increase by 40 bcm/yr to reach just over 70 bcm/yr by 2025.
“Under the long-term contract underpinning gas supplies via the Power of Siberia pipeline, Russia’s gas exports to China are set to increase to 15 bcm in 2022 and gradually ramp up to 38 bcm/yr by 2025. Russia can divert over 10 bcm of LNG passing through the YAMAL LNG plant from Europe to Asian markets. Rerouting all the LNG flows from Europe to Asia would significantly increase shipping costs, especially during the December to June period when navigation on the Northern Sea Route is limited due to ice and weather conditions. Our forecast assumes that Arctic LNG train 1 will be commissioned, which could increase LNG supplies to Asian markets by 9 bcm/yr, although they would face similar constraints as cargoes from YAMAL LNG,” the report says.
IEA experts note that the current sanctions put at risk the development of Arctic trains 2 and 3, which are assumed to be delayed beyond 2025 in IEA’s current forecast.
“Once operational, they could supply an additional 18 bcm/yr to Asian markets. The planned 50 bcm/yr Power of Siberia two pipeline is designed to connect the western Siberian fields to China’s gas market through Mongolia. According to Gazprom’s own estimates, the pipeline could be constructed by 2027/28. Notably, no legally binding supply contract has been agreed for this route and negotiations between Gazprom and its counterparts in China may last for several years, possibly delaying its start-up to beyond 2030,” the report says.