Russia: Gazprom Considers LNG as Fuel

The Gazprom delegation headed by Alexander Medvedev, Deputy Chairman of the Company’s Management Committee is taking part in the 16th International Conference “Sakhalin Oil and Gas 2012”.

At the keynote session Alexander Medvedev delivered a speech about Gazprom’s strategy in Asia.

It was emphasized that Gazprom Group under the Government’s authority implemented the Eastern Gas Program, which provides for the development of all necessary conditions in Eastern Siberia and the Far East for gas export to China and other Asian countries. Therefore, Gazprom was creating gas production centers in Eastern Russia and had already finished laying the first Sakhalin – Khabarovsk – Vladivostok gas transmission system in the Far East. Besides, the Company was examining potential construction of a gas pipeline to China and South Korea.

Speaking about Gazprom’s strategic plans in Asia-Pacific, Alexander Medvedev specified that the Company’s interest was determined by the regional economic potential and by the prospects of the long-term increase in the demand for natural gas. According to his opinion, many countries in Asia-Pacific were currently obliged to satisfy their demand for this energy carrier, partly of fully, through imported feedstock.

“Asian countries’ dense population and high industrial capacity predetermine excessive demand for natural gas in the decades to come. They are able to become Russian gas consumers comparable in volume with European ones. So far, Asia-Pacific represents a premium market – it is ready to pay more for gas than in the trading platforms of the USA and Europe,” said Alexander Medvedev.

Such countries as Japan, China and South Korea were named among Gazprom’s key partners in the region.

Attractiveness of the Japanese market is determined by its geographical nearness enabling to reduce transport costs. Moreover, Gazprom has a vast potential to amplify cooperation with Japan, particularly within the frameworks of gas use as a motor fuel not only for vehicles, but also for marine transport.

A special place in Gazprom’s marketing strategy in Asia-Pacific is given to China. According to Alexander Medvedev, partnership with China is of a long-term nature, determining the process of negotiations on Russian pipeline gas supply terms and conditions. It was mentioned that conclusion of an agreement on pipeline gas supplies depends on reaching a consensus regarding the price parameters. Besides, the meeting addressed the prospects for deeper bilateral cooperation on underground gas storage facilities construction in China and shale gas production.

In addition, it is planned to construct a gas pipeline to the Republic of Korea via the Democratic People’s Republic of Korea, which will allow for an increase in the energy, military and political security on the Korean Peninsula. At the moment, the Joint Working Group of Gazprom and Kogas deals with coordination of the future pipeline route.

It was stressed that other countries of the region are also interested in Russian natural gas import. Gazprom is developing or planning cooperation with India, Vietnam, Pakistan, Bangladesh, Singapore, Taiwan and Thailand. In this regard, it was noted that taking into account the demand fluctuations in some regions, volumes of the liquefied natural gas (LNG  ), which should have been delivered to other markets, were redirected to India and China.

Alexander Medvedev also mentioned the prospects for using LNG as a motor fuel in Asia-Pacific. For instance, it is evidenced by the expected increase in the Chinese car fleet running on CNG and LNG, which is likely to achieve 1.1 million units in the current year versus 150 thousand in 2010.

The speaker emphasized that transport companies, car makers and many others, along with gas producers, could be involved in shaping of the NGV business opening extraordinary prospects for joint work.

In conclusion of his speech, Alexander Medvedev summarized that the present development pace of Asia-Pacific countries allowed the company to speak about great possibilities for Gazprom’s export policy, especially in the sphere of LNG and pipeline gas.

“An additional confirmation of the upcoming “golden age” of natural gas has been received at the recent APEC Summit where all member countries recognized the priority of this type of fuel in further energy development. And if we take into consideration that today these countries are considered to be the drivers of sustained economic growth, we are looking into the future of our export policy in the Asian markets with great optimism,” said Alexander Medvedev.

[mappress]
LNG World News Staff, September 27, 2012: Image: TEPCO