{"id":203294,"date":"2024-03-11T11:00:00","date_gmt":"2024-03-11T15:00:00","guid":{"rendered":"https:\/\/ibkrcampus.com\/?p=203294"},"modified":"2024-03-12T05:03:34","modified_gmt":"2024-03-12T09:03:34","slug":"russian-gas-exports-face-an-uncertain-recovery","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/commodities\/russian-gas-exports-face-an-uncertain-recovery\/","title":{"rendered":"Russian Gas Exports Face An Uncertain Recovery"},"content":{"rendered":"\n<p>European imports of LNG rose sharply following Russia\u2019s invasion of Ukraine two years ago. The US was well positioned to step in and&nbsp;<a href=\"https:\/\/www.eia.gov\/todayinenergy\/detail.php?id=61483\">provided<\/a>&nbsp;virtually all the additional LNG Europe bought. The current pause on new LNG export terminals runs counter to these trade flows, but it\u2019s increasingly clear this policy has few supporters other than some climate extremists.<\/p>\n\n\n\n<p>Russia has had to pivot towards Asia and FSU (Former Soviet Union) buyers for its natural gas exports. In 2021 Russian&nbsp;<a href=\"https:\/\/www.energypolicy.columbia.edu\/publications\/russias-gas-export-strategy-adapting-to-the-new-reality\/\">exports<\/a>&nbsp;via both pipeline and as LNG were 244 Billion Cubic Meters (BCM), around 23.6 Billion Cubic Feet per Day (BCF\/D). For reference, last year the US became the world\u2019s largest&nbsp;<a href=\"https:\/\/www.eia.gov\/dnav\/ng\/hist\/n9133us2A.htm\">LNG exporter,<\/a>&nbsp;averaging 11.9 BCF\/D.<\/p>\n\n\n\n<p>Last year Russian exports were 142 BCM, down 42% over two years.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" width=\"1030\" height=\"579\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2024\/03\/Blog-Image-March-6-2024-1-1030x579-1.jpg\" alt=\"Europe Turns West\" class=\"wp-image-203295 lazyload\" title=\"Blog Image March 6 2024 1\" data-srcset=\"https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2024\/03\/Blog-Image-March-6-2024-1-1030x579-1.jpg 1030w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2024\/03\/Blog-Image-March-6-2024-1-1030x579-1-700x393.jpg 700w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2024\/03\/Blog-Image-March-6-2024-1-1030x579-1-300x169.jpg 300w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2024\/03\/Blog-Image-March-6-2024-1-1030x579-1-768x432.jpg 768w\" data-sizes=\"(max-width: 1030px) 100vw, 1030px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1030px; aspect-ratio: 1030\/579;\" \/><\/figure>\n\n\n\n<p><a href=\"https:\/\/sl-advisors.com\/wp-content\/uploads\/sites\/2\/2024\/03\/Blog-Image-March-6-2024-1-1030x579.jpg\"><\/a>Returning gas exports to their previous level will take years if it occurs at all. Negotiations over the Power of Siberia 2 pipeline project with China are moving slowly, and there\u2019s even a suggestion that Russia may begin construction of the pipeline before they have a signed agreement in hand. China clearly feels they have a strong hand to play \u2013 and yet China\u2019s own energy strategy is to lessen its dependence on western supplies. Their booming EV market is one way to reduce the need for crude imports. Another is to align more closely with Russia, since on several levels they need one another.<\/p>\n\n\n\n<p>Russia is also expanding its LNG export capability. The Novatek Arctic LNG 2 terminal with annual capacity of 27 BCM (2.6 BCF\/D) may start operations as soon as this month. The US has threatened anyone providing \u201cmaterial support\u201d with penalties or criminal prosecution. This apparently hasn\u2019t dissuaded Philip Adkins, CEO of Red Box Energy Services, as described in this&nbsp;<a href=\"https:\/\/ig.ft.com\/russia-sanctions\/\">FT article<\/a>.<\/p>\n\n\n\n<p>Other projects that are less far along are vulnerable to sanctions as well as denied access to western liquefaction technology. Russian LNG projects have suffered timing delays. See&nbsp;<a href=\"https:\/\/www.energypolicy.columbia.edu\/publications\/russias-gas-export-strategy-adapting-to-the-new-reality\/\">Russia\u2019s Gas Export Strategy: Adapting to the New Reality<\/a>&nbsp;for more detail.<\/p>\n\n\n\n<p>Last week the International Energy Agency (IEA) published&nbsp;<a href=\"https:\/\/www.iea.org\/reports\/co2-emissions-in-2023\/executive-summary\">CO2 Emissions in 2023<\/a>. In recent years the IEA has moved from providing objective analysis of energy markets to promoting anodyne versions of the energy transition. Few of their projections on energy use are remotely plausible. As a result, some think if Trump wins the election he\u2019ll&nbsp;<a href=\"https:\/\/www.reuters.com\/world\/us\/kerry-trump-cant-stop-green-energy-revolution-china-coal-threat-looms-2024-02-13\/\">stop funding<\/a>&nbsp;the IEA, which seems to have outlived its purpose with its new approach.<\/p>\n\n\n\n<p>The IEA&nbsp;<a href=\"https:\/\/www.iea.org\/reports\/co2-emissions-in-2023\/executive-summary\">reported<\/a>&nbsp;that global energy-related CO2 emissions grew by 1.1% last year. Executive director&nbsp;<a href=\"https:\/\/twitter.com\/fbirol\/status\/1763444377249018159\">Fatih Birol<\/a>&nbsp;claimed that increased EV deployment over the past five years had constrained global oil demand, thereby reducing emissions. He overlooked that in the world\u2019s biggest EV market Chinese electricity is 62% derived from coal. At the IEA, cheerleading sometimes beats analysis.<\/p>\n\n\n\n<p>Canada announced that the TransMountain Expansion (TMX) pipeline that they purchased from Kinder Morgan (KMI) in 2018 (see&nbsp;<a href=\"https:\/\/sl-advisors.com\/canadas-failing-energy\">Canada\u2019s Failing Energy Strategy<\/a>) will finally start operating. It connects oil-rich Alberta with Pacific export terminals in British Columbia.<\/p>\n\n\n\n<p>TMX is planning 2.1 million barrels of&nbsp;<a href=\"https:\/\/www.argusmedia.com\/en\/news-and-insights\/latest-market-news\/2543963-tmx-crude-linefill-starts-in-april-may-meg\">linefill<\/a>&nbsp;next month and another 2.1 in May. Construction has been a financial disaster for taxpayers, with the ultimate cost likely to exceed by 4X estimates when KMI deftly unloaded the project. Alberta has always struggled to get its oil to market. British Columbia\u2019s left-leaning government has long been hostile to TMX, which prompted KMI\u2019s sale. Keystone XL was intended to add southern takeaway capacity until Biden canceled it. Alberta\u2019s oilmen will be relieved.<\/p>\n\n\n\n<p>Canada also intends to&nbsp;<a href=\"https:\/\/www.reuters.com\/business\/energy\/canada-expedite-approval-new-nuclear-projects-energy-minister-says-2024-02-29\/\">expedite<\/a>&nbsp;approval of new nuclear projects, a pragmatic step that acknowledges the limitations of solar and wind. The&nbsp;<a href=\"https:\/\/www.sierraclub.ca\/new-nuclear-not-part-of-path-to-net-zero\/\">Sierra Club Canada<\/a>&nbsp;is, like its US namesake, opposed to nuclear power. Climate extremists aren\u2019t good for the rest of us.<\/p>\n\n\n\n<p>Carbon Capture and Sequestration (CCS) is often dismissed by those who want the world to rely on intermittent energy. Occidental is building the world\u2019s biggest CCS facility in Texas and is optimistic about licensing the technology. They gave up on one project, named&nbsp;<a href=\"https:\/\/carboncredits.com\/occidental-petroleum-quietly-abandons-biggest-carbon-capture-plant\/\">Century<\/a>, after concluding the economics weren\u2019t attractive enough. However, they drew a $550 million investment from Blackrock in&nbsp;<a href=\"https:\/\/www.oxy.com\/news\/news-releases\/occidental-and-blackrock-form-joint-venture-to-develop-stratos-the-worlds-largest-direct-air-capture-plant\/\">Stratos<\/a>, which is expected to be commercially operational by the middle of next year.<\/p>\n\n\n\n<p>In Singapore,&nbsp;<a href=\"https:\/\/www.reuters.com\/business\/energy\/exxonmobil-shell-work-with-singapore-carbon-capture-storage-project-2024-03-01\/\">Exxon and Shell<\/a>&nbsp;have formed a JV to work with the government on a CCS project. Opponents dislike CCS because it allows fossil fuels to be used without emitting CO2. This is why the rest of us should hope CCS becomes a vital part of the energy chain, since it will preserve our use of reliable energy rather than the intermittent, weather-dependent type.<\/p>\n\n\n\n<p>&#8212;<\/p>\n\n\n\n<p>Originally Posted March 6, 2024 &#8211; <a href=\"https:\/\/sl-advisors.com\/russian-gas-exports-face-an-uncertain-recovery\">Russian Gas Exports Face An Uncertain Recovery<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>European imports of LNG rose sharply following Russia\u2019s invasion of Ukraine two years ago. <\/p>\n","protected":false},"author":29,"featured_media":203295,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":true,"footnotes":""},"categories":[21,6,8,9,26,3],"tags":[147,1056,41,204],"contributors-categories":[13626],"class_list":{"0":"post-203294","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-commodities","8":"category-north-america","9":"category-region","10":"category-securities","11":"category-text-articles","12":"category-traders-insight","13":"tag-commodities","14":"tag-crude-oil","15":"tag-energy","16":"tag-gas","17":"contributors-categories-sl-advisors"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v27.3) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Russian 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