15 Apr 2022 15:11

Novak: EU does not have sufficient infrastructure to receive LNG for quick replacement of Russian gas, growth of price in Asia could pull it there

MOSCOW. April 15 (Interfax) - Europe does not have sufficient infrastructure to receive liquefied natural gas (LNG) which could replace Russian gas supplies, while in the case of rising prices, LNG can go to Asian markets, Russian Deputy Prime Minister Alexander Novak said in an article in Energy Policy magazine.

"Some European politicians are considering the possibility of completely refusing to buy Russian gas because they do not want to pay for deliveries in rubles. I emphasize that the transfer of payments for gas to the national currency from the Russian side is logical and prompted by objective reasons - the desire to receive payment for delivered goods with a 100% guarantee. Russia gains this confidence owing to our proposed settlement scheme, unlike the one that has been in place until recently," Novak said.

"At the same time, the conditions for buyers remain as comfortable as possible. Several buyers have already agreed to transfer payments for gas to rubles, and we are waiting for a decision from other importers," he said.

"As for possible alternative hydrocarbon exporters instead of Russia, American LNG producers have long big bidding for the role of leading gas suppliers to Europe, aimed to occupy a significant share of the European market. At the end of March, the U.S. concluded an agreement with the EU to supply at least 15 billion cubic meters of LNG in 2022. It is planned that LNG supplies to the region from the U.S. will increase in the future," Novak noted.

"But there are a number of important nuances here. The lack of necessary infrastructure to receive LNG will not allow for ramping up supplies quickly. The volume of Russian gas on the European market last year exceeded 156 billion cubic meters, which is more than 10-fold the volume announced by the US. Besides, the cost of this LNG is considerably higher than that of pipeline gas from Russia. The factor of reliability is also important. We remember how last fall, due to higher prices on the Asian market, Europe missed out on a significant amount of LNG," the Russian deputy prime minister said.