As US President Donald Trump doubles down on his energy ambitions, Russia is not-so-quietly positioning itself to become the go-to LNG provider for the Asia Pacific region.
For several years, at least since Donald Trump became president more than two years ago, the US has insisted that American sourced liquefied natural gas (LNG) is the answer for Europes gas diversification needs, particularly a long-needed pivot away from geopolitically charged Russian pipeline gas.
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Moreover, US claims that its LNG is the answer for European gas and energy security needs have caused rifts in EU-US relations, particularly relations between longtime allies Washington and Berlin. In a televised meeting with reporters and NATO Secretary-General Jens Stoltenberg before a NATO summit in Brussels last year, Trump said, referring to the controversial Nordstream 2 gas pipeline project, that it was “very inappropriate” that the US was paying for European defense against Russia while Germany, the biggest European economy, was supporting gas deals with Moscow.
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Since that time Berlin has been the first to blink as it promised to develop more LNG infrastructure and procure not only more US but Qatari and other producers gas. However, the country is still pushing through with the Nord Stream 2 project. The Russian-led $11 billion gas pipeline will stretch some 759 miles (1,222 km), running on the bed of the Baltic Sea from Russian gas fields to Germany, bypassing existing land routes over Ukraine, Poland and Belarus. It would double the existing Nord Stream pipelines current annual capacity of 55 billion cubic meters (bcm) and is expected to become operational by the end of next year.
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Now, the US energy patch may have another hurdle to overcome, which also intersects the largest LNG market in the world – the Asia Pacific region which accounts for 72 percent of global LNG demand. On Wednesday at an LNG conference in Moscow, Shell's Senior Deal Lead Stuart Bradford said Russian LNG is well positioned to compete with North American projects to reach new markets in Asia and the Atlantic Basin despite challenges. He added that Russian LNG can offer several location options – the planned capacity expansion at the Sakhalin plant, the Arctic with Yamal LNG and Arctic LNG 2 projects led by Russian Novatek, and the Baltic coast, with the Baltic LNG project.
However, he also said that North American projects benefit from lower capital expenditures, from so-called “special relationships” as well as being supported by lower tax regimes, than their Russian project counterparts. Bradford added that the commercial arrangements in North America are implemented on “basis risks,” with gas prices based on the well-established Henry Hub, adding that competition is healthy. “Shell is convinced that Russia LNG can commit to these challenges.” However, Bradfords comments need to be taken in light of Shells participation in the fledgling Russian LNG sector. The company, the worlds larRead More
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