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The Russian president is concerned over the changes on the gas market

October 24, 2012, 12:30 UTC+3
Vladimir Putin held a meeting of the presidential committee of the fuel and energy sector, at which a draft of the Russian Doctrine of Energy Security was discussed
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On Tuesday, Russian President Vladimir Putin held a meeting of the presidential committee of the fuel and energy sector, at which a draft of the Russian Doctrine of Energy Security was discussed. Russia should not lose the traditional sale markets of energy carriers, promoting on new markets at the same time. The president urged the top managers and state officials to promote on the markets in the East (India, China and Japan). He paid attention to the changes on the gas market, particularly the shale gas revolution and the growth in the trade of liquefied gas.

The Russian Energy Ministry has worked out a draft of the Russian Doctrine of Energy Security, the RBC daily reported. The documents of strategic planning and the system of indicators on domestic and foreign markets should be drafted on the basis of the doctrine.

In the last few years the configuration of the energy market began to change, the president stated. “Europe is forming a common gas market and is diversifying the sources of supplies. Europe takes domestic decisions, which are not always coordinated with its partners and are not always correct in term of international law,” Putin elaborated. A tough struggle not only for long-term, but also short-term supplies is being waged among the exporters, the president went on to say. “But at the same time the consumption of our eastern neighbours is growing, as China, Japan and India are very promising consumers,” he said.

The volume of the liquefied gas trade is growing in the United States and Canada. “Politicians, experts and businesspeople began speaking about a true shale gas revolution. The shale gas production reached 214 billion cubic metres in the US,” Vladimir Putin went on to say.

President Putin’s interference was needed for Gazprom to take in earnest the changes on the gas market, particularly the shale gas revolution and the liquefied gas trade growth, the Vedomosti daily reported. At a meeting of the presidential committee on the fuel and energy sector on Tuesday Vladimir Putin instructed Gazprom to analyse the market and report about the principles of the export policy. Putin listed what Gazprom should focus on. First of all, this is the shale gas, as in 2011 the shale gas production reached 214 billion cubic metres in the US (this is 35% of Russian production level).

In 2010, when the shale gas production in the US reached 138 billion cubic metres, Gazprom CEO Alexei Miller assured that the shale gas will not exert a serious influence on the European market, as in the debates on the shale gas technologies the PR campaign plays a major role, the Vedomosti daily recalled.

Another important tendency has already taken shape a long time ago that is the growth in the liquefied gas trade, Putin went on to say.

According to the International Gas Union, in 2011 Russia exported only 10.5 million tonnes of liquefied gas that is 4.3% of world export. Gazprom exports liquefied gas only from the Sakhalin-2 project, the gas production at the Shtokman field, from which liquefied gas is planned to deliver, as well as the launch of a liquefied gas plant in Vladivostok were delayed several times.

In theory, Gazprom can adapt to those realities of the gas market, which Putin listed, director of East European Gas Analysis Mikhail Korchemkin noted. For this purpose it is primarily needed to refuse from the South Stream gas project and change the pricing policy in Europe. But this sounds unrealistic in practice, as the losses will be too high, he said in the pessimistic manner.

Gazprom actually should advance more actively in the Asian direction, yet the Russian gas giant failed to agree with China and it is still unclear, what will be the situation in the pricing policy, Nomos-bank analyst Denis Borisov contemplated. It is not late to revise the strategy, he went on to say, though it was needed to take into account all these challenges before. But the most important thing is that all these tendencies are finally recognized, Borisov underlined.

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