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Production and Use of LNG in the Arctic
9 April 2019
12:00—13:30
KEY CONCLUSIONS
Share of natural gas in the global energy mix will grow

The rate of global gas consumption growth is about 1.6% per year. This is the highest rate of energy consumption in the world. Over the past 10 years, gas demand has increased by 40%, that is by 1.5 billion cubic metres of gas. <...> Gas trade increased from 1,134 billion to 1,778 billion cubic metres <...> We expect that the share of LNG trade will increase to 51% by 2025, and to 70% by 2040. <...> In general, the share of natural gas in the global energy mix will grow from 23% in 2017 to 26% in 2035. The share of oil and coal will be declining over this period by about 10% overall — Alexander Novak, Minister of Energy of the Russian Federation.

Russia may take up 30%–40% of the global LNG market

There is a large market niche, and there are enormous opportunities for Russia to participate in the world markets, and to occupy up 30%–40% of this niche, taking into account our capacity in terms of the natural resource base and our competitiveness — Alexander Novak, Minister of Energy of the Russian Federation.

Enormous energy reserves are located in The Arctic

Natural gas reserves in the Russian Arctic amount to 53.4 trillion cubic meters. <...> Today, Russia produces 725 billion cubic metres, of which 83% is produced in the Arctic zone. That gas is competitive, despite the fact that it is produced in the Arctic, because of the low cost of production, very good quality of natural resources and their occurrence — Alexander Novak, Minister of Energy of the Russian Federation.

The resource base of the Yamal and Gydan Peninsulas is unlimited. <...> Our strategy involves active investment in exploration. <...> We audaciously project that the production capacity will be 70 million tons by 2030 — Lev Feodosyev, First Deputy Chairman of the Management Board, NOVATEK.

Development of the Arctic is an incentive for improving and implementing innovations

10 years ago, we thought that we could not work in the Arctic. <...> Every step in the Arctic requires innovation, and over these 6 years we have acquired great international experience — Dmitry Kobylkin, Minister of Natural Resources and Environment of the Russian Federation.

Development of the Arctic is a large-scale infrastructure project, and it includes the LNG industry and civil shipbuilding — Lev Feodosyev, First Deputy Chairman of the Management Board, NOVATEK.

ISSUES
Insufficient government support

The conflict today is that ordering ships from Korea makes more economic sense rather than building them at Zvezda. The state should not only stimulate by commanding where and how to buy, but also create the conditions that would allow Zvezda to be competitive — Valery Seleznev, First Deputy Chairman of the Committee on Energy, The State Duma of the Federal Assembly of the Russian Federation.

LNG production depends on foreign technology

80% of all software used by LNG plants today is foreign. <...> We must come up with specific government contracts and make cosmetic changes to them over the next few years in order to ensure transition to Russian software by 2025 — Valery Seleznev, First Deputy Chairman of the Committee on Energy, The State Duma of the Federal Assembly of the Russian Federation.

Lack of a satellite system to ensure safe navigation in the Arctic

There must be a safe path, we must completely ensure navigation. We are not satisfied with what Roshydromet offers today throughout the Northern Sea Route. This is especially true for the Asia-Pacific corridor — Dmitry Kobylkin, Minister of Natural Resources and Environment of the Russian Federation.

Unfair competition from the US in the LNG market

The factor that plays an important role today is the protectionism that we see on part of the United States, which, in fact, imposes their liquefied natural gas on European consumers to the detriment of their freedom of choice — Alexander Novak, Minister of Energy of the Russian Federation.

Environmental vulnerability of the Arctic

Environment and science are always important question. Everything that happens in the Arctic must be under the most severe environmental scrutiny, because we understand how vulnerable the Arctic is — Dmitry Artukhov, Governor of Yamalo-Nenets Autonomous Area.

SOLUTIONS
Attracting foreign investment into the development of Arctic deposits

Russia did not limit itself only to its own financial resources. We drove Chinese and French partners, and it shows Russia’s approach to the implementation of its projects in the Arctic – the approach that is open to attracting co-investors and is open for partners contributing their skills and developing various projects — Kirill Dmitriev, Chief Executive Officer, Russian Direct Investment Fund (RDIF).

[Our] investments [exceeded] USD 10 billion, and the projects were jumpstarted with these funds that we invested. Our goal to gain a 10% market share by 2020 with a portfolio of about 40 million tons — Arnaud Le Foll, Total Country Chair Russia; General Director, Total Exploration and Production Russie.

Developing infrastructure in the Arctic

Number one challenge for the Arctic is creating infrastructure — Chilcote Ryan, TV Host, Special Correspondent, PBS NewsHour.

The material was prepared by the Russian news agency TASS