Russian gas: Will there be enough investment?

Approximately $18 billion per year of investment will be needed to ensure that sufficient gas is produced between now and 2030, the majority of which is needed in production assets.

In the following piece we outline some of the major challenges facing the gas sector in Russia and focus on where some of the potential upsides are to be found. While we remain concerned about the overall level of investment in Russian upstream and transportation, the potential of the independent gas producers to rise to the challenge seems strong given the right supporting policy measures.
The Russian government seems to be moving in the right direction with regard to domestic pricing policy and third party access to the pipeline system, yet reliance on imported gas from Central Asia is likely to increase the risks to security over the medium term. Our concerns on investment need to be seen within the context of our overall concern about global levels of investment, in upstream gas, pipelines and other infrastructure and even in the burgeoning liquefied natural gas (LNG) industry.

Importance of Russia for Global Gas

Russia holds the largest share of proven gas reserves worldwide, it produces and exports more gas than any other country and is the second largest gas market in the world after North America. Russia also has a very strong export market in Europe where it accounts for almost a quarter of OECD Europe gas needs. It is in Western Europe that pipeline gas from Russia meets competition from Atlantic LNG. Through this interaction, Russian gas production and demand has the potential to affect other markets, such as the US or Japan, indirectly through the global LNG market. Therefore, an appreciation of supply and demand fundamentals in Russia is critical to gaining an understanding of the future of gas markets worldwide.

Energy Publisher