MOSCOW, March 7. /TASS/. In 2022-2023, around 120-140 bln cubic meters of Russian pipeline gas will leave the European market and Europe will need several years to replace these volumes, Head of the Laboratory of the Institute of Economic Forecasting of the Russian Academy of Sciences Valery Semikashev said in his article published by the InfoTECH analytical center.
"120-140 bln cubic meters of Russian pipeline gas, which previously went to Europe, will leave this market in 2022-2023. The annual commissioning of new LNG production capacities is in the range of 20-30 bln cubic meters. This means that it will take several years to make up for this decline. And this is assuming that demand from other countries does not grow," he explained.
According to the expert, this combination of various factors means that the period of high gas prices will continue in the coming years until 2026-2027.
"What exactly are high gas prices? They are European spot prices that exceed $450-500 per 1,000 cubic meters. However, in recent years, prices have reached $1,500-2,000, which is equivalent to $400-500 per barrel of oil. This means that today's prices are extremely high, and in the medium term they will average $600-800, with periodic fluctuations in the range of $300-1,500," the expert believes.
According to Semikashev, Europe was able to survive the 2022 and 2022-2023 heating seasons despite reduced Russian gas supplies, but due to lower gas consumption and the loss of some of its industrial potential, many companies began to relocate or reduce production. Europe has also incurred financial costs. Estimates of the additional costs and the costs of supporting business are in the hundreds of blns of euros, the expert noted.
Semikashev believes that Europe will suffer even greater economic losses in 2023 than it did last year due to the fact that global demand for gas will rise by 1-1.5% this year, while supply will remain flat or even fall as the minimum amount of LNG production capacity is put into operation, and Russia may reduce deliveries further. There are also risks of sabotage or further sanctions, he added.
Russia may completely stop supplying liquefied gas to Europe as a result of the sanctions war and redirect these volumes to Asian markets, the expert added. According to him, last year Europe received about 135 bln cubic meters of LNG, more than 20 bln of which was Russian gas from the Yamal LNG project, and another 10 bln cubic meters of Russian gas was "practically stolen - confiscated in German storage facilities owned by Gazprom's German subsidiary".
Semikashev noted that if Russia's gas production in 2022 will decrease by about 140 bln cubic meters compared to last year, the decrease this year will not exceed 20 bln cubic meters, so the prospects of using the released gas should be considered. According to the expert, such options include the development of swap gas supplies with Iran or neighboring countries - Azerbaijan and Turkmenistan, increasing direct gas supplies to chemical enterprises in Belarus and Russia, and connecting Russia's eastern regions to the unified gas supply system. "Creating such a route will make it possible to transfer surplus gas, which Europe has refused, from the western part of Russia to its eastern part," he added.