There is nowhere to put gas – Newspaper Kommersant No. 2 (7447) dated 01/10/2023

Already at the beginning of January, the EU countries unexpectedly found out that they can generally not worry about the passage of winter – stocks in storage are high, and consumption has seriously fallen. Although the Europeans were very lucky with the warm weather, the main reason for the success was a rational strategy – the authorities forced companies to fill gas storage facilities in the summer, despite very high prices, and also to buy up all the LNG available on the market. The EU countries also have a longer-term understanding of how they are going to replace Russian gas: we are talking about building new LNG receiving terminals (some already commissioned), purchasing additional volumes from the US and Qatar, as well as reducing gas consumption (which ” will kill” some enterprises). In principle, it is already clear where gas will be supplied to Europe in five years, although it is still difficult to say how much it will cost.

Against this background, the absence of a similar strategy from the Russian authorities is becoming clearer: now it is impossible to answer the question where in five years Gazprom could export 90 billion cubic meters of gas lost last year in the European market. In the fall of 2022, the public was informed about the existence of two ideas: a gas hub in Turkey and a “gas union” project involving Kazakhstan and Uzbekistan. In both cases, so far we are talking about mirages, which is especially clearly seen in the example of the Turkish hub: not a single country or company has yet volunteered to buy gas there, not a single figure has been named regarding the possible volumes of supplies or the size of investments. As for the “gas union”, the authorities of both Central Asian republics have publicly renounced such a name, assuring that they are ready to buy Russian gas only on market terms, and no decisions have been made. It should also be noted that, according to the criteria of solvency and market size, even Turkey is not a full-fledged replacement for the EU countries, not to mention the countries of Central Asia.

The only realistic possibility on the agenda is the construction of a gas pipeline to China: in contrast to the above concepts, Power of Siberia 2 looks like a clear and economically viable project, albeit a very capital intensive one. The problem is that China, which is just recovering from the coronavirus, does not yet need additional Russian gas and can afford to wait for more attractive conditions from Gazprom. But, probably, Russia, being the leader in gas reserves in the world, cannot endlessly hope for China’s decision, watching how its share in the world market is occupied by gas from other producers. This is the role played by Iran, which was cut off by sanctions from the technology of building LNG plants, was unable to create them itself and had to watch as Qatar, located on the other side of the Persian Gulf, became the world’s largest exporter of LNG.