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Under the Current Market Conditions, Gazprom will Considerably Strengthen its Positions in Asia

Source: 9/29/2015, Location: Asia

As part of the Sakhalin Oil & Gas 2015 International Conference, Alexander Medvedev, Deputy Chairman of the Gazprom Management Committee delivered today in Yuzhno-Sakhalinsk a report entitled ‘Gazprom Group in Asia-Pacific Gas Markets’.

It was noted that price adjustments in the gas markets caused by a drop in oil quotations hadn’t affected the dominant position of Asia-Pacific as a driver of growing global gas consumption. Following the expert reviews, by 2025 the region’s demand for imported gas might grow 1.5 times from present 280 billion cubic meters to over 400 billion cubic meters a year.

Meanwhile, cheaper oil made the contractual prices linked to gas indexes, for instance, to Henry Hub, less appealing. Under the current conditions, oil linkage is becoming more attractive for customers, since its advantages include predictability and protection from other players’ manipulations.

By gradually diversifying its geographic footprint, Gazprom is running the project for gas supply to China via the eastern route. The talks are well underway on exporting Russian gas to China via the western route. The possibility is being considered for supplying gas to China from Russia’s Far East.

The Company’s pipeline projects are backed up by LNG business, the main market for which is Asia-Pacific. During the last ten years the Company sold 60 per cent of LNG products there. The major customers are Japan and South Korea. Great attention is given to expanding the sales market and the scope of work at niche and new regional markets in Asia, Latin America and the Middle East.

Currently the Company’s long-term portfolio is mostly represented by supplies from Sakhalin II. Today the project operator is getting ready for developing the project documentation for the third process train of the plant. “Sakhalin II allows for a partnership with global energy majors and proximity to the key markets of Asia-Pacific. It means a five-year success of Russia’s first ever and world’s most efficient LNG project,” stressed Alexander Medvedev.

In order to increase liquidity, Gazprom actively expands its LNG portfolio due to new long- mid- and short-term deals as well as spot gas supplies. In the near future the Company’s portfolio will be supplemented by receipts from the Yamal LNG project. Contracts for LNG purchase were signed with Nigeria and Malaysia. As a result, in the last two years Gazprom doubled its LNG portfolio. The bulk of these volumes will be delivered to Asia-Pacific.

“Despite certain economic crisis phenomena, Gazprom owns sufficient resources and goes on consistently advancing its East-oriented activities.

We are sure that under the current market conditions the Company will considerably strengthen its presence in the Asia-Pacific market,” said Alexander Medvedev in the end.

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