Gazprom to jump on booming LNG market

Gazprom is looking to cash in on booming global LNG demand with its liquefied natural gas production strategy covering up to 2030. LNG is set to be the future of gas transportation system.

Russia`s natural gas giant has announced it has ambitions to become one of the leading LNG suppliers. The company has two big future gas projects – Shtockman and Sakhalin-2.

The company’s spokesman Sergey Kupriyanov stressed that after Sakhalin-2 starts production, Gazprom will control over five per cent of global LNG supplies.

“LNG market is developing very quickly. It will allow Gazprom to enter other markets that are not available through pipeline transportation systems. We expect to receive the first supplies from Shtockman field by 2014,” Kupriyanov said.

Gazprom says there will be competition on the Russian market in terms of LNG production, but it will all depend on the right cooperation between the gas companies.

Since 2000 the market for LNG has grown four fold, and currently represents around twenty per cent of the gas trade globally.

Analysts back the idea to develop LNG production in Russia, saying this will open up more markets for producers. They think this will also make the concept of a gas cartel, an idea recently touted by the Russian government, more realistic.

Ron Smith, Chief Economist of Alfa Bank, says cartel of gas exporters makes no sense unless you’re able to switch your markets.

“If you’re tied to your existing market by pipeline, then Gazprom pulling back gas in Europe, for example, will not raise prices in the United State or anywhere else in the world, it will only affect Europe itself. So you need the LNG to tie markets together and make a global market,” he believes.