25 Nov 2020 11:16

U.S. LNG cannot ensure energy security of large countries, let alone all of Europe - Gazprom

MOSCOW. Nov 25 (Interfax) - Liquefied natural gas (LNG) from the United States cannot be considered as the basis for the energy security of large gas consuming countries, let alone whole regional markets such as Europe, Gazprom said after its board reviewed the outlook for the development of shale gas and LNG in various parts of the world and opportunities and threats for the company.

The Russian gas giant's board of directors receives a report on this subject once a year.

The crisis of 2020 lead to a decrease in demand and drop in prices for energy resources, including natural gas, Gazprom said. In the shale gas industry, the negative impact primarily hit the U.S., which accounts for about 95% of global production of such gas. The growth of shale gas production in the U.S. could slow significantly in the next few years, the company said, citing analysts' estimates.

"The development of gas production from shale in other countries in the period to 2030 will not have a significant impact on the global gas market and Gazprom's business," the company said.

For Gazprom, "production of shale gas is not a promising avenue of business development due to the high proven reserves life of conventional gas fields, and their economic and environmental advantages," the company said.

The company also said that the macroeconomic situation has had a negative impact on the long-term development prospects of the LNG sector. Only one final investment decision on a new LNG production project has been made so far this year. In addition, the anticipated launch dates of a number of projects have been pushed back.

In 2020, due to the low competitiveness of supplies from the U.S., buyers declined a large number of shipments of LNG produced in the country. As a result, LNG plants in the U.S. operated far below capacity in the summer.

"The slump in activity could lead to a decrease in the forecast amounts of LNG supply on the world market in the long-term, and the formation of an additional niche for supplies of Gazprom gas," the company said.

The latest estimates indicate that the main growth of LNG imports in the period to 2030 will occur in the Asia-Pacific region, including China, which will increase purchases to supplement growing imports of Russian pipeline gas.

"Russia has sufficient resource potential to increase LNG production. However, it makes sense to use the ability to transport gas in the form of LNG to diversify export routes and enter new markets unable to import it through gas pipelines," Gazprom said.