THE GLOBAL LIQUEFIED NATURAL GAS MARKET: THE CURRENT STATUS AND PROSPECTS FOR THE IMPLEMENTATION OF ARCTIC LNG PROJECTS IN RUSSIA

Original article

Download article

Mikhail V. Ulchenko

Luzin Institute for Economic Studies of the Kola Science Centre of the Russian Academy of Sciences, Apatity, Russia, m.ulchenko@ksc.ru, ORCID 0000-0002-5227-1772

Abstract. Transitioning from coal to natural gas and renewable energy sources has become a global trend over the past decade. Despite efforts made by the EU, USA, Japan, and several other nations to replace fossil fuels with alternative sources, significant success in this domain remains elusive, with hydrocarbons continuing to dominate the energy landscape.  Notably, the share of liquefied natural gas (LNG), once perceived as a weak alternative to pipeline gas, constituted 56 %  of the global gas exports by the end of 2022, with the number of consumer countries reaching 47. This study aims to assess the potential capabilities of key LNG suppliers in increasing production and export volumes to meet the growing demand  in the global LNG market. A primary focus is placed on evaluating the capabilities and plans of Russian companies to execute large-scale LNG projects. The research employs methods of systems and statistical analysis, along with economic forecasting. The article discusses the key trends in the global LNG market’s development and identifies the factors exerting the most significant impact on its trajectory. An analysis of the current long-term program supporting LNG production in Russia  is conducted, highlighting the key support measures available to domestic companies. The practical significance of this study lies in identifying countries poised to increase their production volumes and enter the LNG production and export arena within six to seven years. The research pinpoints key large-scale domestic LNG projects set to make the Russian LNG share  in the world market grow from 8 % to 15–17 %. Subsequent steps of this research will involve assessing the prospects  for selling Russian and American LNG in the Asia-Pacific (APAC) market.

Keywords: Arctic, liquefied natural gas, production, export, import, market

Acknowledgments: this study was conducted within the framework of the state-funded research project titled  “Strategic Planning for the Development of the Arctic in New Geoeconomic and Political Conditions” at the Kola Science Centre of the Russian Academy of Sciences.

For citation: Ulchenko M. V. The global liquefied natural gas market: The current status and prospects for the implementation of Arctic LNG projects in Russia. Sever i rynok: formirovanie ekonomicheskogo poryadka [The North and the Market: Forming the Economic Order], 2023, no. 4, pp. 85–103. doi:10.37614/2220-802X.4.2023.82.007.

References

  1. Agarkov S. A., Bogoyavlenskogo V. I., Koz’menko S. Yu., Masloboev V. A., Ul’chenko M. V. Global‘nye tendentsii osvoeniya energeticheskikh resursov rossiiskoi Arktiki. Chast’ I. Tendentsii ekonomicheskogo razvitiya rossiiskoi Arktiki [Global trends in the development of energy resources in the Russian Arctic. Part I. Economic development trends in the Russian Arctic]. Apatity, KSC RAS, 2019, 170 p. (In Russ.).
  2. Gordeev D. Mezhtoplivnaya konkurentsiya v elektrogeneratsii: ugol’ ili gaz [Fuel competition in power generation: coal or gas]. Ekonomicheskoe razvitie Rossii [Economic development of Russia], 2016, vol. 23, no. 4, pp. 55–59. (In Russ.).
  3. Li, J., Dong, X., Jiang, Q.,Dong, K., Liu, G. Natural gas trade network of countries and regions along the belt and road: Where to go in the future? Resources Policy, 2021, vol. 71, no. 101981.
  4. Tsvetkov P. S., Pritulyak D. M. Sravnitel’naya otsenka stoimosti transportirovki malotonnazhnogo szhizhennogo prirodnogo gaza i truboprovodnogo gaza [A comparative assessment of the cost of transportation of low-tonnage liquefied natural gas and pipeline gas]. Sever i rynok: formirovanie ehkonomicheskogo poryadka [North and market: formation of economic order], 2018, no. 6 (62), pp. 30–43. (In Russ.).
  5. Kondratov D. I. Mirovoi rynok gaza: sovremennye tendentsii i perspektivy razvitiya [The global gas market: current trends and development prospects]. Vestnik Rossijskoj akademii nauk [Bulletin of the Russian Academy of Sciences], 2022, vol. 92, no. 4, pp. 360–371. (In Russ.).
  6. Shchegol’kova A. A. Osobennosti sovremennoi ekonomicheskoi kon”yunktury global’nogo rynka szhizhennogo prirodnogo gaza [Features of the modern global liquefied natural gas market]. Ekonomika i upravlenie: problemy, resheniya [Economics and management: problems, solutions], 2020, vol. 5, no. 12 (108), pp. 153–163. (In Russ.).
  7. Drapak K. A., Krylov E. G., Makarov A. M., Kozlovtseva N. V. Perspektivy razvitiya proektov po proizvodstvu SPG v Rossii [Prospects for the development of LNG production projects in Russia]. Izvestiya Volgogradskogo gosudarstvennogo tekhnicheskogo universiteta [Bulletin of Volgograd State Technical University], 2021, no. 8 (255), pp. 65–68. (In Russ.).
  8. Ulchenko M. V., Fedoseev S. V. Tendentsii razvitiya mirovogo rynka szhizhennogo prirodnogo gaza i perspektivy realizatsii rossiiskikh arkticheskikh proektov [Trends in the development of the global liquefied natural gas market and prospects for the implementation of Russian Arctic projects]. Sever i rynok: formirovanie jekonomicheskogo porjadka [The North and the market: the formation of an economic order], 2022, vol. 25, no. 4 (78), pp. 40–57. (In Russ.).
  9. Tikhomirov A. V Problemy i perspektivy upravleniya SPG-proektami Rossii [Problems and prospects of LNG project management in Russia]. Problemy teorii i praktiki upravleniya [Problems of theory and practice of management], 2022, no. 2, pp. 116–127. (In Russ.).
  10. Kravchenko M. P. Geopolitika prirodnogo gaza [The geopolitics of natural gas]. Vestnik Moskovskogo gosudarstvennogo lingvisticheskogo universiteta, Seriya: Obshchestvennye nauki [Bulletin of the Moscow State Linguistic University. Series: Social Sciences], 2015, no. 2 (713), pp. 69–77. (In Russ.).
  11. Babich S. V., Bulaeva M. M. Rossiiskii szhizhennyi prirodnyi gaz i rossiiskii truboprovodnyi gaz na Evropeiskom rynke: konkurentsiya ili sinergiya [Russian liquefied natural gas and Russian pipeline gas on the European market: competition or synergy]. Vestnik evraziiskoi nauki [Bulletin of Eurasian Science], 2019, vol. 11, no. 6, p. 9. (In Russ.).
  12. Filimonova I. V., Provornaya I. V., Nemov V. Yu., Kartashevich A. A. Mirovoi rynok SPG: strukturnye osobennosti i prognoz razvitiya [The global LNG market: structural features and development forecast]. Delovoi zhurnal Neftegaz.RU [Neftegaz.RU business magazine], 2023, no. 2 (134), pp. 50–61. (In Russ.).
  13. Kotov V. A. Razvitie infrastruktury SPG v Germanii: gonka so vremenem [Development of LNG infrastructure in Germany: a race against time]. Nauchno-analiticheskii vestnik Instituta Evropy RAN [Research and analysis bulletin of the Institute of Europe of the Russian Academy of Sciences], 2022, no. 3, pp. 83–94. (In Russ.).
  14. Zhiltsov S. S. Geopoliticheskoe sopernichestvo Rossii i SShA za evropeiskii gazovyi rynok [Geopolitical rivalry between Russia and the United States for the European gas market]. Problemy postsovetskogo prostranstva [Problems of the post-Soviet space], 2022, vol. 9, no. 1, pp. 8–19. (In Russ.).
  15. Avraam, C., Chu, D., Siddiqui, S. Natural gas infrastructure development in North America under integrated markets. Energy Policy, 2020, vol. 147, no. 111757.
  16. Emel’yanov V. V. Sovremennye tendentsii razvitiya mirovogo rynka SPG [Modern trends in the development of the global LNG market]. Rossiiskii vneshneekonomicheskii vestnik [Russian Foreign Economic Bulletin], 2020, 3, pp. 112–121. (In Russ.).
  17. Besedina S. S. Vliyanie pandemii COVID-19 na formirovanie mirovogo rynka SPG [The impact of the COVID-19 pandemic on the formation of the global LNG market]. Innovatsii i investitsii [Innovations and investments], 2021, no. 5, pp. 277–280. (In Russ.).
  18. Markelova E. A. Energeticheskii faktor v ekonomicheskom razvitii Katara: sovremennye vyzovy i perspektivy [The energy factor in the economic development of Qatar: modern challenges and prospects]. Ekonomika stroitel’stva [Economics of construction], 2022, no. 5, pp. 4–11, (In Russ.).
  19. Telegina E. A., Studenikina L. A., Tyrtyshova D. O. Transformatsiya gazovykh rynkov: globalizatsiya i konkurentsiya. Energeticheskaya politika [Energy policy], 2020, no. 1 (143), pp. 60–69. (In Russ.).
  20. González, A., Lagos, V. Do LPG prices react to the entry of natural gas? Implications for competition policy. Energy Policy, 2021, vol. 152, no. 111806.
  21. Andreichyk, A., Tsvetkov, P. Study of the Relationship between Economic Growth and Greenhouse Gas Emissions of the Shanghai Cooperation Organization Countries on the Basis of the Environmental Kuznets Curve. Resources, 2023, 12, 80.
  22. Byadovsky D. A., Rudenko A. E., Melnikov I. A. Analiz sovremennogo mirovogo i otechestvennogo opyta v primenenii szhizhennogo prirodnogo gaza kak universal’nogo energonositelya XXI veka [An analysis of international and domestic experience in the use of liquefied natural gas as a universal energy source of the 21st century]. Perspektivnoe razvitie nauki, tekhniki i tekhnologii [Long-term growth of science and technology], 2021, pp. 49–54. (In Russ.).
  23. Tsvetkov P. S., Fedoseev S. V. Analiz spetsifiki organizatsii proektov malotonnazhnogo proizvodstva SPG [Analysis of project organization specifics in small-scale LNG production]. Zapiski Gornogo instituta [Journal of Mining Institute], 2020, no. 246, pp. 678–686. (In Russ.).
  24. Bridge G., Bradshaw M. Making a Global Gas Market: Territoriality and Production Networks in Liquefied Natural Gas. Economic Geography, 2017, vol. 93 (2), pp. 215–240.
  25. Hewitt T., Ryan C. What’s Different about Floating LNG? A Legal and Commercial Perspective. Energy & Natural Resources Law, 2015, vol. 28 (4), pp. 503–532.
  26. Frolova I. Yu. Kitaiskii proekt “Ekonomicheskii poyas Shelkovogo puti”: razvitie, problemy, perspektivy [The Chinese project “The Economic belt of the Silk Road”: development, problems, prospects]. Problemy natsional’noi strategii [Problems of the national strategy], 2016, no. 5 (38), pp. 47–62. (In Russ.).
  27. Cherepovitsyn, A., Evseeva, O. Parameters of sustainable development: Case of arctic liquefied natural gas projects. Resources, 2021, vol. 10 (1), pp. 1–27.
  28. Sasaev N. I. Razvitie krupnotonnazhnogo proizvodstva szhizhennogo prirodnogo gaza kak strategicheskii prioritet ekonomiko-sotsial’nogo razvitiya Rossii [Development of large-capacity production of liquefied natural gas as a strategic priority of economic and social development of Russia]. Upravlencheskoe konsul’tirovanie [Management consulting], 2018, no. 8 (116), pp. 82–95. (In Russ.).
  29. Sasaev N. I. Strategicheskie vozmozhnosti razvitiya malotonnazhnogo proizvodstva szhizhennogo prirodnogo gaza v Rossii [Strategic opportunities for the development of low-tonnage production of liquefied natural gas in Russia]. Ekonomika promyshlennosti [Industrial economics], 2019, vol. 12, no. 2, pp. 136–146. (In Russ.).
  30. Yan L., Zhou Y., Golyanin A. Construction and analysis of LNG cold energy utilization system. Bulletin of Science and Practice, 2020, vol. 6, no. 5, pp. 267–275.
  31. Judin S. S., Cherepovicyn A. E. Partnerstvo gosudarstva i biznesa dlya obespecheniya ekonomicheskoi ustoichivosti slozhnykh promyshlennykh neftegazovykh sistem v Arktike [Partnership between government and business to ensure the economic sustainability of complex industrial oil and gas systems in the Arctic]. Sever i rynok: formirovanie jekonomicheskogo porjadka [The North and the market: the formation of an economic order], 2022, vol. 25, no. 2 (76), pp. 7–18. (In Russ.).
  32. Kozmenko, S., Saveliev, A., Teslya, A. Impact of global and regional factors on dynamics of industrial development of hydrocarbons in the Arctic continental shelf and on investment attractiveness of energy projects. IOP Conference Series: Earth and Environmental Science, 2019, 302 (1), 012124.
  33. Podolyanets L. A., Feldman A. L. Development of economical and geographical image of Eastern Siberia as a subject and an object of strategic investments in oil and gas complex. International journal of energy economics and policy, 2017, no. 2 (7), pp. 360–366.
  34. Lazarev D. M. Reducing the hazardous effects of LNG using quantitative risk assessment. Asia-Pacific journal of marine science and education, 2023, vol. 12, no. 1, pp. 50–61.
  35. Shchegol’kova A. A., Evgrafova L. E. Modernizatsiya sistemy transportirovki arkticheskogo prirodnogo gaza v strategicheskoi perspektive [Modernization of the Arctic natural gas transportation system in the strategic perspective]. Sever i rynok: formirovanie ekonomicheskogo poryadka [The North and the Market: Forming the Economic Order], 2017, no. 2 (53), pp. 57–67. (In Russ.).
  36. Selin V. S., Ulchenko M. V. Ekonomicheskaya kon”yunktura postavok arkticheskogo prirodnogo gaza v Evropu v usloviyakh “ukrainskogo krizisa” [The economic situation with Arctic natural gas supplies to Europe in the conditions of the Ukrainian crisis]. Vestnik MSTU [Vestnik MSTU], 2016, vol. 19, no. 2, pp. 512–520. (In Russ.).
  37. Ulchenko M. V. Rossiiskii arkticheskii gazovyi kompleks: osnovnye problemy i perspektivy razvitiya [The Russian Arctic gas sector: Key issues and development prospects]. Apatity, KSC RAS, 2023, 103 p. (In Russ.).