Future Gas Production in Russia

October 20, 2009 | 00:00

Future gas production in Russia: is the concern about lack of investment justified?

The author shows that the short term outlook for Russia gas supply which has emerged since late 2008 has radically changed due to the global recession and reduced levels of gas demand in Russia CIS countries and Europe. Concern about Gazprom's ability to deliver volumes contracted to European buyers has been replaced by the latter asking for relief from their contractual obligations to take these volumes. For this reason the decision to delay investments in new production is entirely logical.

In addition the paper shows how the Russian gas supply "roadmap" for the next several decades has become much clearer; Gazprom has much more time than previously believed to commence its Yamal Peninsula development. Accusations that Gazprom is "not investing" in new supply make no sense without detailed discussion of the different supply and demand elements of the Russian gas matrix and how these may evolve over the next decade. And when Gazprom proposes investments in new pipelines which would pipelines would help to guarantee the delivery of Russian gas to Europe against exactly the type of transit interruptions experienced in 2006 and 2009 these are opposed by many in Europe on geopolitical grounds. Continued unfocussed criticism about lack of investment obscures rather than illuminates the complexity of the Russian gas situation."

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