The result of the year for gas exporters: Russia is being thrown out of the energy market

Yekaterina Maksimova

Novak explained the overall decrease in gas production by 12% (Gazprom alone will reduce production by 19.6% by the end of the year) by stopping the work of the export infrastructure.

Simply put, blown up by the "Northern Streams". According to the Deputy Prime Minister, the production and export of liquefied natural gas will grow by more than 8.7%.

By the end of 2021, the export of natural gas, according to the Central Bank, amounted to 55.6 billion dollars. LNG exports - $7.3 billion. A total of $62.9 billion by the end of 2021.

At the same time, the total exports of basic energy resources last year exceeded $ 243 billion ($ 93.4 billion more than 2020, due to an increase in export prices). Share of four main energy commodities (natural gas, LNG, crude oil and oil products) in the total volume of Russian exports amounted to 49%.

What Russia has lost foreverNovye Izvestia reported that before the start of the SVO, Gazprom alone supplied almost 150 billion cubic meters to Europe.

The result of 2022: Russia lost 120-140 billion cubic meters of pipeline gas exports (there were small supplies through the Turkish Stream and Ukrainian transit).

According to Alexey Belogoryev, Deputy Director for Energy at the Institute of Energy and Finance, LNG exports may amount to 32.5 million tons this year, which is almost +9% compared to last year.

Supplies to China (via the Power of Siberia and LNG) have also increased significantly. But the relationship with the European market is still incomparable.

Last year, China received 10.3 billion cubic meters of pipeline gas from Russia, plus about 6 billion cubic meters of LNG. In the first 10 months of 2022, China has significantly increased imports of Russian gas (+170% or about 43 billion cubic meters). By the end of the year, if the dynamics continues, China will import about 52 billion cubic meters.

The turn to the East compensated for almost half of the supplies to Europe in 2022 - 97 billion gas was supplied to non-CIS countries this year, according to Gazprom's report (-45.1% or 80.2 billion cubic meters compared to the same period in 2021). And it was possible to recover only a third of Gazprom's supplies, if compared with the pre-crisis year 2021.

In any case, Russia will have to forget about the previous export volumes, as well as export gas revenues.

"In 2022, pumping will drop to 68 billion cubic meters, and export volumes over the past three months are equivalent to 30 billion per year – this is the level we need to count on in 2023," writes the author of the Spydell_finance tg channel and adds: the European energy market is closed for Russia forever, primarily for ideological and political reasons from the European parties, when the economic feasibility of trade relations is put on the back burner. The strategic direction has been set, and it remains unchanged: Europeans do not need Russian gas and Europe will not enter the energy crisis twice.

As for Russia's plans aimed at both the possible restoration of gas supplies to Europe (the creation of a Turkish hub) and the expansion of supplies to China, both of these development vectors cause experts more doubts than optimism.

"Russia's attempt to improve relations with Turkey in order to create a gas hub for re-exporting gas to continental Europe may turn into a strategic failure. It may turn out, as with the Northern Streams – multibillion-dollar investments, 5 years of construction and implementation, and in the end ... ? But betting on India and China may not be successful either – monopolizing key customers and reducing them to two will lead to natural forced dumping and a reduction in the margins of our exporters. Therefore, in fact, Russia has no choice but to "get off the oil needle", because export channels are significantly degraded and will not allow ensuring strategic stability and development based on export revenues", continues Spydell_finance.

Professor, Doctor of Economics Igor Lipsits in a recent interview with Novye Izvestia also categorically stated that China does not intend to expand gas friendship with Russia and plans to build a second gas pipeline to China are unlikely to be realized.

"There will be no second "Power of Siberia". This is all empty talk. Statements, protocols of intent, but there is no money. The Chinese had to give money. As with the construction of the "Power of Siberia" - China allocated money, Gazprom built and pays with gas supplies. Now we don't get live money there, we pay for Chinese loans. And no funds were allocated for the second gas pipeline. Conversations are going on, Xi Jinping nods his head, but does not give money. Therefore, the “Power of Siberia-2” is all a very big fog. There are conversations, they make a beautiful appearance, but there is no money, and therefore nothing is clear there," says Igor Lipsits.

The author of the Spydell_finance TV channel insists: it should be understood clearly and unambiguously - Russia is being thrown out of the energy market of unfriendly countries (the processes are irreversible), and infrastructure restrictions and political factors will not allow transferring all export flows (oil, petroleum products, gas, LNG, coal and metals) to China and India. "Therefore, we have finished with the export raw materials economy. If this powerful stress test is not enough to lead to the accumulation of resources and priority in science and technology, then nothing will help," summed up Spydell_finance.