Page 7 - GLNG Week 09 2022

GLNG COMMENTARY GLNG

Foreign companies
have helped to develop
Russia’s LNG sector.

attracted to Russia by its low-cost production. Novatek’s 17mn tpy Yamal LNG plant, launched
Without its support, Rosneft may struggle to in late 2017, and its 20mn tpy Arctic LNG-2
maintain production at challenging North plant. Meanwhile, German company Winter-
Komsomolskoye heavy oilfield in west Siberia, shall Dea is helping Gazprom develop deep gas
and may be unable to exploit the difficult-to-re- reservoirs at the Urengoi field in west Siberia.
cover Domanik limestone oil formation, where TotalEnergies has condemned Moscow’s
the pair are currently undertaking a three-year actions in Ukraine, but stopped short of with-
pilot programme. drawing from Russia, though it did say it would
no longer provide capital for new projects in
Next in line the country. Severe Western sanctions against
Next in line was Shell, which said late on Feb- Russia imposed in response to the conflict in
ruary 28 it was leaving its joint ventures with Ukraine will make operating there difficult,
Gazprom. It is partnered with the Russian gas and the company is likely to face sustained pres-
giant at the 10mn tonne per year (tpy) Sakha- sure from governments and NGOs to leave the
lin-2 LNG plant in the Russian Far East, and with country.
Gazprom’s oil arm Gazprom Neft at the Salym The next question is which, if any foreign
Petroleum oil development in west Siberia. investors will replace them. Indian compa-
Shell played an integral role in jump-starting nies are actively involved in Russia’s oil and
Russia’s LNG sector. It was the original operator gas industry, and New Delhi has been more
of the Sakhalin-2 LNG terminal, the country’s reserved in its criticism of Russia’s invasion of
first, with Gazprom only replacing it in the role Ukraine. But Chinese state companies seem
when the project was midway through develop- more likely candidates.
ment. Gazprom had hoped for the company to Like Russia, China’s relationship with the Severe Western
play a role in its planned Baltic LNG terminal, West has grown more adversarial, albeit to a
but the partnership fell through in 2019 after lesser extent, over its anti-democratic prac- sanctions against
Gazprom brought on board a partner at the pro- tices, alleged genocide of Uyghurs and inten- Russia imposed
ject belonging to sanctioned Russian oligarch tions towards Hong Kong and Taiwan, among
Arkady Rotenburg. other issues. Russia and China have been keen in response to
This was followed by ExxonMobil announc- to expand both their economic and political
ing on March 1 that it would discontinue oper- ties, as was evidenced during Russian President the conflict in
ations at Sakhalin-1, which it operates on behalf Vladimir Putin’s meeting in Beijing with Chi-
of a consortium of Japanese, Russian and Indian nese counterpart Xi Jinping in February. Among Ukraine will make
companies. The super-major said the process to the many deals signed during Putin’s trip, Gaz- operating there
discontinue operations would need to be “care- prom and CNPC agreed on a new gas deal cov-
fully managed and closely co-ordinated with the ering 10bn cubic metres of annual supply. difficult.
co-venturers”. When relations with the West first col-
lapsed in 2014, in the aftermath of annexation
What next? of Crimea, Putin proudly declared that Russia
With BP, Equinor, Shell and ExxonMobil now would make a pivot towards Asia. The success
gone, pressure will build on those IOCs that still of this strategy lies in balancing out Western
have a significant presence in Russia. First and and Chinese interests. Isolated from Europe,
foremost is France’s TotalEnergies, which holds Russia may find itself comfortably dependent
a 16% interest in Russia’s largest gas producer on China, which will be sure to exploit its junior
Novatek. The company is also an investor in partner’s weakened state where it can.™

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