Turning east: how fast can Russia divert away its gas supplies from Europe to Asia? well, at least a decade in the very best case…
Russia supplied just over 30 bcm of gas to Asia in 2021 through a combination of LNG and piped gas supplies via Power of Siberia. in comparison, it exported 155 bcm to the European Union.
Power of Siberia is set to ramp-up to its nameplate capacity of 38 bcm/y by 2025 and Russia could divert around 12 bcm of LNG from its YAMAL plant. in addition, Arctic LNG T1 could provide an additional 9 bcm flowing to Asia.
Those are the quick wins. going beyond that would require much more time and capital…
Gazprom signed a 10 bcm/y contract with CNPC for gas supplies from Sakhalin, potentially starting by 2024/25.
The Arctic LNG T2&3 are set to be delayed into the second half of the decade amidst the current sanction regimes. their start-up could provide 18 bcm of LNG to Asia.
The real game changer would be the 50 bcm/y Power of Siberia 2 pipeline, connecting West Siberia’s fields to China.
Whilst Russia has been promoting this pipeline for almost a decade now, no contract supply has been signed with China so far, and its construction would take at least 5 years.
In best case, Power of Siberia could start up after 2030, allowing Russian gas supplies to ramp-up to Asia to their 2021 levels to the EU.
Loosing the European gas market is a real blow for the Russian gas industry, whilst the road to Asia will be lengthy and bumpy. and the profit margins might not be the same, when you are captive of one giant market…
What is your view? how will Russia’s pivot to the east play out for gas? what are the main challenges ahead?
Source: Greg Molnar (LinkedIn)
