Gazprom: Gas Market Booming in Europe and China

Credit: Gazprom
Credit: Gazprom

By The Maritime Executive 10-08-2018 08:25:41

Alexey Miller, Chairman of the Management Committee of Russian energy company Gazprom, gave his views on the global energy balance at the St. Petersburg International Gas Forum this week, saying he is sure that the gas industry in general will steadily grow in the next five years. This growth, he says, will not be affected by the other energy sources. 

Gazprom expects global gas demand to increase by 17 percent, or 635 billion cubic meters, until 2025. About 30 percent of this demand will come from China. Compared to 2017, Chinese demand will grow by 80 percent until 2025, adding almost 200 billion cubic meters of gas, said Miller.

A new gas pipeline from Russia to China is currently under construction - the Power of Siberia pipeline. “There is absolutely no doubt that Russian pipeline gas will start flowing to the Chinese market on December 20, 2019.” Further new transmission routes to China are also under discussion, says Miller.

However, the key market for Gazprom is Europe, as it has been for the past 50 years. Russian gas deliveries from Gazprom to Europe totaled 194.4 billion cubic meters in 2017, an increase of 8.4 percent from 2016. Miller noted that over the past year, Nord Stream has operated seven percent above its planned capacity. “The pipeline has a design capacity of 55 billion cubic meters, although it can export a little more thanks to its technological capabilities. In 12 months, we have delivered 59 billion cubic meters to Europe via Nord Stream. In other words, the demand for Nord Stream as a gas export corridor from Russia is even higher than 100 percent. This answers the question of whether we need Nord Stream 2.”

The Nord Stream 2 gas pipeline is already under construction, and Miller expects to start supplying gas from it in January 2020. Additionally, further south, the TurkStream gas pipeline is under construction. It will deliver gas to Europe across the Black Sea.

Miller notes that LNG deliveries to Europe have decreased by 4.5 billion cubic meters over the first eight months of this year. The reason for that is the Asian market, he says. “Even though the gas prices in Europe have risen by almost 20 percent since January 1, 2018, the price of LNG is still higher. Crucially, LNG prices in Asia are a third higher than those in Europe. Essentially, LNG continues to overflow from Europe to Asia. This trend has been going on for years. Moreover, experts have started to call Europe the last resort for LNG.”

Gazprom has 35 trillion cubic meters of gas in recoverable reserves. “Our reserves will allow us to fully meet the demand from Russian and European consumers in the 21st century. We can meet any demand, be it in the domestic market here in Russia or in the markets of Europe or Asia,” said Miller.