Page 46 - bne_October 2021_20211004

46 I Special focus bne October 2021
giants, initially from Valanginian, and recently from Achimov deposits, but
this can only slow the natural decline
of the NPT production, not reverse it.
In order to meet demand, Gazprom has been developing a new gas province
on the Yamal peninsula in the Russian Arctic since the early 2010s, where the Bovanenkovskoye field, the first in a series of the new super-giants, produced 99 bcm of gas in 2020,” Yermakov added.
Nord Stream 2 has been criticised as being economically superfluous, as Ukraine has plenty of capacity (an estimated total of around 145 bcm) to transit all the gas Russia wants to send to the west. But that ignores the fact that in addition to the decline of the Ceno- manian fields, the pipelines serving it are also at the end of their useful life and are due to be decommissioned.
“Gazprom has already announced that it will be decommissioning the older pipelines in the Central corridor in line with the reduction of flows from NPT caused by production declines there. Some of these pipelines have been in operation for over forty years and have passed the limits of their economic life, imposing high repair and maintenance
sia's part of the Arctic, where some 75% of Russia’s untapped gas deposits are thought to lie.
All these assumptions are built into Gaz- prom’s long-term investment strategy for the development of its fields to 2035. All of the falling output at NPT will be taken up with new production from the Yamal complex.
The long-term demand from Europe may be limited after the EU launched its Green Deal this year. German Chancel- lor Angela Merkel was in Moscow in September to meet with Putin and talk gas but during her visit she said that gas imports from Russia could fall to nothing in the next 25 years as the EU moves increasingly to renewables and tries to become carbon neutral by 2050.
For Gazprom the future is in the east, supplying China, where demand is expected to decouple in the next few decades from the paltry 10 bcm China is currently importing from Russia, via the Power of Siberia pipeline.
“The Asian market – the market of Asia-Pacific – has an exceptionally large capacity. According to forecasts up to
of imports will total 160 bcm. Moreover, the annual volume of gas imports is expected to reach 300 bcm as early as by 2023, in just 15 years. The figure is just staggering,” Miller told delegates.
Gazprom can easily increase deliveries via the Power of Siberia route but also from Sakhalin by a spur to China from the Sakhalin-Khabarovsk-Vladivostok line. But a real game-changer could be a mooted pipeline to China from Western Siberia via Mongolia that could for the first time create an alternative to supplies to Europe for Russian gas in Western Siberia.
“The [Chinese] contract is a unique one. It is the world’s largest contract for gas supplies: 38 bcm of gas for 30 years. Having signed this contract, China has become one of our biggest consumers in a flash. In fact, today we can say that the co-operation between Russia and China is the co-operation between the largest producer and the largest importer,” Miller told the conference delegates. Gazprom plans to increase exports to China to 80 bcm a year by 2035, accord- ing to its long-term strategy.
The Eastern and Northern pipeline sys- tems are being expanded, while those in the Central corridor are due to be phased out. Standing behind Nord Stream 2 is another new set of pipelines to feed into this important export route. The new Bovanenkovo-Ukhta and Ukhta-Torzhok pipelines were completed in 2018 with a capacity of 115 bcm per year and were built to evacuate new gas from the super- giant Bovanenkovskoye field, which is part of the Yamal complex, and send it on to Germany via Nord Stream 1 and 2.
There may well be a lot of politics involved in the decision to build Nord Stream 2 and cut Ukraine out of the gas delivery loop to Europe. However, there are a lot of business reasons too. The falling production at the traditional gas fields in West Siberia, the ageing pipeline system that supports it and most impor- tantly, the anticipated shrinking demand for gas in the EU all make Europe a less interesting market. The future for Rus- sian gas lies in the east and in the mean- time Gazprom is trying to sell what gas it can to the west as profitably as it can.
“Gazprom has already announced that it will
be decommissioning the older pipelines in the Central corridor in line with the reduction of flows from NPT caused by production declines there.”
costs on Gazprom,” Yermakov said. “This means that the capacity of Russian pipelines leading towards the Ukrainian transit corridor is going to decline substantially in the future, limiting
the volumes of gas available for the Ukrainian route.”
The Yamal project is about tapping new super-fields and building new pipelines to service them that can supply Europe for decades to come. Moreover, the Nord Stream 2 gas pipeline is not only shorter; it is much cheaper to use, improving the profitability for the development of the Yamal fields and those beyond it in Rus-
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2040, consumption in this region will grow by 1.5 trillion cubic metres of gas, of which 60% will be imported,” Miller said at a conference in September.
“There is no doubt that the Chinese market is the most dynamic and fast- growing one, and it shows simply unbe- lievable consumption growth rates every year. The year 2021 is no exception. In the first half of the year, natural gas con- sumption in China grew by 15.5%. The volume of imports increased by 23.8%. This means that China’s projected con- sumption based on the results of 2021 will amount to 360 bcm, and the volume