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New markets for Russia's gas

Despite being the second-largest producer of natural gas in the world - and having access to the largest reserves of the resource on Earth - the number of markets Russia can easily trade to has been shrinking. This is due largely to changing international relations. As such, the nation has had to look for new markets for its abundant natural resources.

Russia's changing situation regarding its gas exports is already creating a range of opportunities for interested companies. The country is investing heavily in a number of projects that will allow it to trade its gas with new markets, such as Greece, Pakistan and North Korea.

This is not an easy process, of course. Russia has been engaged in many negotiations with these countries, and in some cases has had to make huge financial commitments, such as the $2 billion it has offered to construct a pipeline in Pakistan. However, the nation clearly sees that the results will be worth the expense.

Here are the nations that will soon be receiving Russian gas, as well as the circumstances behind Russia's involvement with them:

 

Pakistan

Increasingly, Russia is looking to export its gas as liquified natural gas (LNG), and it has found a new market in which to sell this resource. The nation has plans to trade LNG with Pakistan as early as 2016. However, in order to do this Russia will need to make a sizable commitment in the form of a $2 billion pipeline.

This will run from Karachi in the south to Lahore in north-east Pakistan, and will be used to transport LNG. In total, the pipeline will measure around 1,100 km in length. This was confirmed by Shahid Khaqan Abbasi, Pakistan's petroleum minister, who said: "Pakistan and Russia have finalised an LNG pipeline deal in a recent meeting in Moscow.

"The two countries will sign a government-to-government basis deal next month. Russia will start its first LNG exports in 2016 and has also offered to sell gas to Pakistan." The pipeline will be constructed by Russian companies as an additional part of this deal. There will be no formal bidding process for the work.

 

Greece

Speculation is currently rife as to Russia's relationship with Greece. However, while no conclusions have yet been reached, it seems likely that Russia will soon be supplying Greece with natural gas via the Turkish Stream project. This move would benefit both parties, and is thought by some to be a certainty.

For example, a senior figure in Syriza - the political party currently running Greece - reported to German magazine Der Spiegel that an agreement had been reached both on a gas discount for Greece and an investment from Russia in the form of 'advance profits' on the project. These would be paid to Greece now, then repaid once the nation started making money on Turkish Stream.

However, Russia has denied such an agreement exists. It is still in negotiations with Greece, with Alexei Miller - chief executive of Russia's state-run gas company Gazprom - meeting with Greek prime minister Alexis Tsipras on April 21st to discuss the issue further. Greece is hoping for investments worth over $5 billion from Russia.

 

North Korea

Finally, Russia might be able to deliver gas to North Korea in the near future. A government official from South Korea, speaking to the newspaper Joongang Ilbo, said: "Kim Jong-un is expected to discuss with Vladimir Putin the project of laying a gas pipeline to connect Vladivostok and the North Korean port of Najin."

This would be done via the Pacific island of Sakhalin, which is located just north of the Japanese island of Hokkaido. A 1,800 km pipeline is currently being constructed from Sakhalin to Vladivostok, and from here the gas would be delivered to North Korea via the Khasan-Najin railway.

Professor Kim Seok Hwan from Hankuk University said: "The North expects to use Sakhalin natural gas to bring its factories and plants to normal operation, while Russia will be able to create a new energy market."


Related Events

Event18 Jun

MIOGE 2018

18-21 June, 2018
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MOSCOW, RUSSIA
Venue: CROCUS EXHIBITION CENTRE

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