Russia Set to Expand Rouble for Gas Scheme to LNG
- July 5, 2022
- Posted by: Quatro Strategies
- Category: Energy
Russia’s natural gas giant Gazprom proposed expanding the government’s rouble for gas scheme for pipeline gas to LNG. The proposal comes after Putin signed a decree to take full control of the Sakhalin-2 LNG plant last week.
Putin’s decree will pave the way for creating a new firm that will take over all rights and obligations of Sakhalin Energy Investment Co.
While Russian state is the majority owner in the project, Shell and Japanese trading companies Mitsui and Mitsubishi also hold just under 50% stake.
Russia supplies around 8% of world’s LNG with 40 billion cubic meters (bcm) per year. The supply mainly comes from the Sakhalin-2 and Yamal LNG, Russia’s largest LNG plant.
Putin’s rouble for gas scheme became law in March, where Russia would require “unfriendly countries” to pay for pipeline gas in roubles.
Several European customers of Gazprom, including Bulgaria, Poland and Finland, were cut off after refusing to comply with Putin’s new rules.
While Europe is the biggest customer of Russia’s pipeline gas, most of the country’s LNG exports are shipped to Asia. In Europe, Spain is one of the buyers of Russian LNG.
Russia last year earned $7.3 billion from LNG exports, according to the state tax service, comparing to $55.5 billion received from piped gas exports.
Before its invasion of Ukraine, Russia had planned to increase LNG production to as much as 140 million tonnes by 2035. It would account for a quarter of current global LNG exports.
It has since suggested this target may have to be delayed.
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