28 Oct 2022 12:13 pm
Expensive gas will rob the global economy of development, according to the head of Russian energy company Novatek. He warns: If the high gas prices continue, the world market will fall back on coal power.
A tightening in the LNG market promises a difficult winter for Europe, with this winter set to be the easiest of the next three, Novatek CEO Leonid Michelson said during a speech at the Eurasian Economic Forum in Baku on Thursday. According to the news agency RIA Novosti he explained:
“Given the current shortage of pipeline gas in Europe and the recovery in demand in China, the additional burden on the LNG market will be at least 60-70 million tons over the next one to two years.
However, major investments are not expected before 2026. In 2023, the production of 18 million tons of gas will be commissioned worldwide, in 2024 – 11 million tons, and in 2025 – about the same amount. Considering the stores are full ahead of this winter, it might be the easiest of the next three winters.”
Michelson explained that the LNG capacity planned worldwide for the coming years “is nowhere near sufficient to meet the increase in demand”. In his opinion, a return of the European economy to environmentally harmful coal is quite realistic. Novatek’s boss remarked:
“Besides the projects in Qatar, two other decisions were recently made in the US to create capacity of about 23 million tons of LNG. But the production companies are in no hurry to make further decisions. With such exorbitant prices, the GDP just not growing. If the price situation is not corrected, demand will also fall and the world will go back to coal.”
According to Michelson, the only way to stabilize the situation with the high gas prices is to increase investments and new LNG capacities. This requires international cooperation in the field of LNG to get new projects off the ground.
“No country in the world can fully implement an LNG project without international cooperation,” said the head of Novatek with conviction. “The availability of this collaboration, the ability to bring together LNG producers, financial institutions, shipbuilders and relevant government agencies will determine how quickly this crisis is overcome.”
Russia will soon tackle the world’s largest LNG project, Michelson said. The natural gas liquefaction plant Arctic LNG-2 is already 70 percent complete, said the Novatek boss.
Arctic LNG-2 is Novatek’s second LNG project. It provides for the construction of three liquefied natural gas production lines, each with a capacity of 6.6 million tons per year. The resource base for the project is the Utrenneye mestorozhdeniye field on the Gydan Peninsula of northern Western Siberia. The first line is scheduled to go into operation in December 2023.
more on the subject – FDP parliamentary group Vice Köhler: As many coal-fired power plants as possible back on the grid