By ELENA MAZNEVA and JAKE RUDNITSKY
Russia is seeking to raise natural-gas exports to Europe as
much as 23% in the next two decades even as the escalating
crisis in Ukraine sparks concern about the regions
reliance on it for imports.
Supplies from Russia, which provided about 30% of
Europes gas last year, may increase to 198 billion
cubic meters by 2035, Energy Minister Alexander Novak said in
an interview in Moscow, while preparing an energy strategy
the government plans to discuss in May.
The strategy is being drafted as the US and the European
Union threaten Russia with sanctions after pro-Moscow troops
took control of Ukraines Crimea region. About half of
Russian gas exporter OAO Gazproms supplies to Europe
travels through Ukrainian pipelines. EU officials are calling
for gas imports from the US to diversify away from
This crisis around Ukraine can change things, but only
at significant economic costs, Simon Pirani, senior
research fellow at Oxford Institute for Energy Studies, said
Tuesday by phone. In the long term, Russia is the swing
producer for the Europe
Gas exports to Europe reached a record 161.5 billion cubic
meters last year, according to Gazprom. That may climb to 173
billion cubic meters in 2020 on the way to the 2035 forecast,
according to the Energy Ministrys preliminary
estimates, which include some liquefied natural gas.
Europe-bound shipments have been disrupted twice since 2006
when disputes between Russian and Ukraine led Gazprom to cut
sales to the neighboring country. The shortfall raised cries
in Europe to seek additional fuel sources, while Russia
responded by planning to add capacity circumventing Ukraine.
Gazprom, which is using the Nord Stream pipeline to send gas
directly to Germany, plans to start shipments to Europe
through the South Stream
pipeline at the end of next year, Gazprom CEO Alexey Miller
said at a March 4 meeting with Prime Minister Dmitry
We are consistently increasing supplies through other
routes that bypass Ukraine, Miller said in comments
posted on the government website.
Gas transit via Ukraine is continuing as usual, a Gazprom
press official said Tuesday, asking not to be identified
because of company policy
The Ukraine crisis has raised questions about the
security of Russian gas supplies and these will be amplified
if there is any actual disruption of gas flowing to
Ukraine, Richard Mallinson, a London-based analyst at
Energy Aspects, said by e-mail.
While Novak declined to comment on the Ukraine situation, his
ministrys preliminary estimates showed shipments
falling to former Soviet republics.
Shipments to countries that used to be part of the Soviet
Union are expected to stay near current levels of 56 billion
cubic meters in 2020 before falling to 45 billion meters by
2035, Novak said.
LNG exports from the US will not end Europes dependence
on Russian gas because of price and availability of supply,
Christopher Granville, managing director of Trusted Sources
UK, said in an e-mailed report.
If Gazprom decides to encourage gas-on-gas competition
on European hubs, it has the ability to keep US LNG out of
the market or at least to force European customers to make
the choice of giving priority to security of supply over
price, Granville said.
Russian exports to Asia will approach Europe
an levels over the next 20
years, Novak. Supplies to Asian countries are seen at 34
billion cubic meters by 2020 including 29 billion cubic
meters of LNG, Novak said. Estimates for 2035 are 117 billion
cubic meters, of which 79 billion cubic meters could be
supplied as LNG.
Russia shipped 15 billion cubic meters of LNG to Asia last
year from Gazproms Sakhalin-2 project
After more than a decade of negotiations, Gazprom plans to
supply as much as 38 billion cubic meters of natural gas a
year to China National Petroleum Corp. by pipeline. The
companies are considering preparing a contract for signing at
Putins visit to China in May, Gazprom said in January.
The state-run exporter may start supplies under the contract
in 2019 to 2020 after building the link, according to
Russias Energy Ministry.
Competition may arise before then. Two Russian companies --
OAO Novatek and OAO Rosneft -- are planning to start new LNG
s in 2017 and 2018 to
supply fuel to Asia after Putin ended Gazproms monopoly
on LNG shipments abroad last year.
Rosneft is also seeking access to a new gas-export pipeline
through Siberia, Kommersant newspaper reported March 7.
The Energy Ministrys press service declined to comment
on Rosnefts proposal as it prepares its response by
We are not considering ending Gazproms monopoly
on gas pipeline exports, Novak said in an interview
before Rosnefts proposal became public. Russia
would not gain if Gazprom and other Russian companies supply
gas to one market as they would reduce the price by competing
with each other.