Page 7 - GLNG Week 11 2023

GLNG COMMENTARY GLNG

Rosneft to reap modest reward

from Russian LNG liberalisation

Russia is liberalising the LNG sector to jumpstart development,

but the gains will be few and largely impact existing players.

RUSSIA ROSNEFT stands to gain the most from pro- large-tonnage gas liquefaction technologies as
posed liberalisation of the Russian LNG market, well as key production equipment, jeopardising
WHAT: Kommersant reported on March 9, but ulti- upcoming projects.
Russia’s government mately the impact of the drafted changes is not The new amendments put together by the
plans to issue more likely to be significant, nor result in new players Russian energy ministry will not result in true
permits for using gas entering the market. liberalisation of the sector, however, as only Rus-
fields to export LNG in the The government has announced plans to tri- sia’s largest energy players are likely to develop.
country’s far north. ple national LNG production within seven years First, Novatek will no longer need to ask again
to 100mn tonnes per year (tpy), in a bid to accel- to export LNG from new fields on the Yamal and
WHY: erate the industry’s development to offset the Gydan peninsulas. Rosneft, on the other hand,
Moscow is scrambling potentially irrevocable loss of most of Russia’s gas will be able to devise a plan to export LNG from
to expand LNG exports market share in Europe. In order to attain this its Vostok Oil megaproject. It has previously sug-
following the loss of goal, Moscow has suggested it will issue more gested that the cluster of onshore fields that make
most of its European gas permits to operators to use their gas deposits to up Vostok Oil could underpin 35-50mn tpy of
market share. underpin LNG projects. Traditionally these per- LNG production.
mits have been difficult to secure, allowing state- The timeframe for Vostok Oil is far from
WHAT NEXT: owned Gazprom and privately-owned Novatek uncertain, however. Having lost key investors
Rosneft will gain to maintain a monopoly over the sector. including Trafigura in the aftermath of Moscow’s
modestly from the The government wants to permit LNG invasion of Ukraine, it is unclear whether even
changes, as will LNG exports from new fields located within the Arc- Vostok Oil’s first stage of development, which is
frontrunner Novatek. tic, Prime Minister Mikhail Mishustin said at a tentatively due to start producing oil next year,
government meeting on March 9. Primarily this will remain on track. The development of LNG
concerns deposits in the northern areas of the production is a more distant prospect. Kom-
Krasnoyarsk and Yamalo-Nenets regions, esti- mersant notes that another potential entry into
mated to hold a combined 3 trillion cubic metres the LNG sector could be former Russian energy
of gas. minister Igor Yusufov’s Yamal Shelf company,
Novatek, the front-runner in Russian LNG which has rights to a number of licences in the
development, initially secured the right to export Baidaratskaya and Obskaya bays.
gas in LNG from only from fields it received No other independents hold sizable gas
licences for prior to 2013 under a government resources in the areas that the Russian govern-
decree. However, the law was reviewed in 2020 ment refers to, suggesting that the proposed eas-
to let it export LNG from additional deposits ing of permitting is unlikely to result in a true
as well to underpin its various LNG projects liberalisation of the sector of any sorts. In the
on the Yamal and Gydan peninsulas. Rosneft, Arctic, prospective projects all belong to Russia’s
meanwhile, only has the right to export LNG top three gas producers. They are Arctic LNG-1,
from offshore gas fields. It unsuccessfully sought Arctic LNG-3 and Obsky LNG, all operated by
permission in the past to export from onshore Novatek; Kara LNG and Taymyr LNG (Vostok
deposits in the Nenets region, in order to under- Oil), proposed by Rosneft, and Tambey LNG
pin its Pechora LNG project. After its request and Shtokman LNG, both controlled by Gaz-
was refused, it told the assets that the project prom. ™
comprised.
The government is now under pressure to do
more to further liberalise the sector, however.
Not only has Gazprom lost most of its market
share in Europe, depriving Moscow of a major
source of budget revenue, but Western sanctions
now prevent Russian companies from obtaining

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