Russia’s exports remained almost at the level of 2022, when we supplied 32.1 million tons to the world market. Above us in the table are Qatar, which exported 78.2 million tons, Australia (79.6 million tons) and the United States (84.5 million tons). Moreover, if LNG exports from Qatar and Australia have remained almost unchanged since 2022 (the countries only changed places in the ranking), the United States increased its shipments by 9 million tons, moving from third to first place.
Given the sanctions against our gas liquefaction projects, Russia, in order to keep up with the leaders, will have to quickly solve the problem of LNG shipments from the new Arctic LNG-2 plant. The first production line has already been launched here (6.6 million tons of LNG per year), but there are no Arctic-class gas carriers capable of delivering the goods to customers. The reason is that the project was included in the US Treasury sanctions list, so the ships already completed in South Korea were not transferred to Russia. Similar sanctions were imposed only against the LNG project planned in Murmansk.
Russia can close the gap with the top three LNG exporters if our companies address the problems of liquefied natural gas transportation.
Much will depend on how fast demand grows on the global gas market and competition among LNG producers. In 2023, supply increased by only 8 million tonnes. This is the smallest increase since the pandemic year of 2020. For comparison: in 2022, the growth was 16.9 million tonnes.
According to Alexei Grivach, deputy director of the National Energy Security Fund, the gap with the top three depends on how our companies cope with the launch of new capacities under sanctions. If we succeed, we will be able to catch up with Australia by 2030.
The LNG industry is developing by leaps and bounds depending on the phase of the investment cycle, Grivach notes. Large capacities were commissioned in 2016-2019. In four years, the LNG market has grown by almost 150 billion cubic meters (about 108 million tons). Then there was a quiet year in 2020. Then, in 2021-2022, another 50 billion cubic meters (33.1 million tons) were added. And calm reigns again. A new wave of capacity commissioning is expected soon. Its peak is expected to occur in 2026-2028.
That is, we have perhaps a year or a year and a half to solve our problems with LNG transportation. If the market is saturated with LNG producers from other countries, it will be quite difficult to enter with additional volumes. Especially considering the EU’s attempts to limit gas purchases from our country. Although, according to GIIGNL, it will be very problematic for Europeans to do this. In 2023, Russia became the third supplier of LNG to the countries of the Old World (14.4 million tons). Only LNG from the USA (56.6 million tons) and Qatar (15 million tons) was imported to Europe more than Russian LNG. Another thing is that Europe is no longer the most attractive market for gas exporters.
As Grivach points out, due to the price crisis of 2021-2023 and the war against the Russian gas pipeline in Europe, part of the demand for natural gas was destroyed. This even creates certain risks for the growth of demand for LNG, which is mostly consumed in regasified form (after the reverse process of conversion from liquid to gaseous state).
At the same time, only reaching full capacity of the Arctic LNG-2 plant and solving problems with gas transportation from it would allow increasing our exports by 20 million tons. Another sanctioned project, Murmansk LNG, could add another 20 million tons. Apparently, this is how we will be able to catch up with Australia, as Grivach mentioned. The main question is where to get ice-class vessels. The Yamal LNG plant currently in operation has 15 gas carriers of this type. Another vessel of this class is expected to be launched in 2024.
Opinion
According to Ivan Timonin, Project Director at Implementa, Russia will be able to maintain its fourth position in the ranking of LNG exporters even without the start of shipments from the Arctic LNG-2 plant. In fifth place is Malaysia, where no new large-scale commissioning of gas liquefaction capacity is expected in the coming years. The only asset currently under construction in the country is the 2 million tonne expansion of the PFLNG project. And it will not be launched before 2027.
At the same time, the gap between Russia and the market leaders, the United States and Qatar, may widen by 2025, the expert believes. Given the high level of utilization of existing capacities, the growth of LNG supplies in the world is now mainly due to the commissioning of new assets. There were relatively few launches in 2023. By the end of 2024, a capacity increase of 33.5 million tons is expected. And in 2025, production should start with a total capacity of almost 60 million tons: 33 million tons in Qatar and 26 million tons in the United States.
Given the high loading of Yamal LNG, as well as the expected expansion of the logistics platform as a result of the cessation of transshipment in European ports (a ban on this is included in the 14th EU sanctions package), changing the current fleet is unlikely to meet the needs of Arctic LNG 2, Timonin believes.
In the short term, the solution will probably be to look for all the gas carriers available for charter on the market in order to rapidly expand the fleet. A longer-term solution would be a further development of our own transshipment capabilities, focusing on both “western” and “eastern” routes to minimise the need for Arctic-class vessels, which are built exclusively for the needs of specific projects and are in fact not available for charter on the free market, the expert explains.
