Since Russia’s invasion of Ukraine, evidence is mounting that Russia’s vital natural gas export industry is steadily collapsing.
According to Russian news reports, Russian pipeline gas exports could fall by as much as 50% this year from last year. And last year was a particularly bad year.
The problem is not limited to gas delivered by pipeline. The European Union has threatened to cut liquefied natural gas imports from Russia, which was the only bright spot for Russian industry last year.
Russia was largely cut off from Europe. Europe, the most important customer of natural gas, paid in full and on time. By initiating hostilities and manipulating supplies by slashing them, Russia will abandon decades of work and establish itself as the largest gas supplier to energy-hungry Europe. ceded its position to Norway.
On Thursday, Izvestia, a Kremlin-related publication, said: report According to government projections, pipeline exports could fall by 50% in 2023. This figure is roughly in line with estimates from some Western countries.
Russia has managed surprisingly well to maintain its share of the oil market despite Western embargoes, but the need to sell at discounted prices has slashed revenues.
But finding new customers for gas is much more difficult as most of the fuel is still transported via fixed pipelines. Russia has less capacity than the United States, Qatar and Australia to export liquefied natural gas, a fuel that can be shipped by ship like oil.
Russia’s losses were an easy victory for the US oil industry, which greatly increased shipments of liquefied natural gas to bases across Europe.
Russia’s pipeline gas exports to the European Union are likely to fall by about two-thirds this year compared to 2022, according to estimates by research firm Kupler analyst Viktor Katna. Also, the first year of the invasion, he’s exports in 2022 fell by more than 50% year-on-year.
Russia could see some more gas sales to China and potentially more gas sales to Turkey. Turkey is now the largest customer of Moscow’s gas. Russia exports gas to China using a pipeline called the Power of Siberia and is looking to build another link. But for now, China is just a small part of what Europe used to be Russia’s gas market.
Europe’s strategy to reduce Russia’s dependence on gas and other energy sources is working surprisingly well. Europe largely compensated for the losses by increasing imports and reducing demand for liquefied natural gas, mainly from the United States. Nearly 18% less gas consumption Data from August to March 2022 compared to monthly averages from 2017 to 2022.
Europe has survived what once threatened with a difficult winter with little disruption, which is calming the market. European gas prices, which surged early in the war, are now down almost 90% from their August peak last year. These price drops will lead to lower revenues for the gas that Moscow manages to sell.
Russian oil revenues are also under pressure, falling to about $39 billion in the first quarter of 2023 compared to the last three months of 2022, with sanctions and price caps beginning to take effect. According to a study released Wednesday, Kyiv School of Economics.
European leaders behind this success are considering expanding the attack to include imports of liquefied natural gas from Russia.
Moscow significantly increased shipments of liquefied natural gas to Europe last year, mainly from its Arctic facilities, but cut pipeline exports. According to consulting firm Rystad Energy, Russia’s LNG shipments to Europe reached record levels in February.
However, EU energy commissioner Kadri Simson has urged bloc members and European energy companies to stop buying Russian LNG and “not sign new contracts with Russia”. I told lawmakers last month.
Some analysts are skeptical that the European Union will ban Russian LNG purchases. In particular, the large purchasers of gas from a facility called Yamal LNG are TotalEnergies, he is one of the most important companies in France, and Naturgy, a major Spanish energy company.
“I think it would be a real headache for the EU to do that,” said James Waddell, head of European gas and global LNG at research firm Energy Aspects.
On the other hand, European leaders, largely screwed over Russian pipeline gas, may calculate that they would do less harm without Russian LNG. Massimo Di Odoardo, vice president of gas at consulting firm Wood Mackenzie, said:
