Sanctions Cripple Russia’s Liquefied Gas Export Capabilities

The new US sanctions pose a serious obstacle to Russia’s attempts to increase its export of liquefied natural gas (LNG), as it tries to compensate for the decline in pipeline gas exports to Europe.

Reuters notes that Russia ranks fourth in the world in LNG production, following the USA, Qatar, and Australia. Moscow aims to increase its share in the global market from the current 8% to about a fifth by tripling production to over 100 million metric tons by 2035. However, Russia’s efforts to redirect gas sales to China, the world’s second-largest energy consumer after the USA, have so far been limited in success. Prolonged negotiations to increase gas sales to China through the “Power of Siberia-2” pipeline have not resulted in a stable contract.

Western sanctions have prompted foreign shareholders to suspend their participation in the project, abandoning their funding commitments and supply contracts for the plant. Most Western companies (French TotalEnergies, Chinese CNPC and CNOOC, and the Japanese consortium Mitsui and JOGMEC), which possess leading technologies, have left Russia following Moscow’s invasion of Ukraine.

The severe blow to the export of liquefied gas will impact Russia’s so-called welfare budget, from which Putin redirects funds to the aggressive war in Ukraine.

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