Gazprom Sees no Threat from US LNG: Zubkov

Russia sees no threat from the US to its gas export business in Europe as the first cargoes of liquefied shale gas could arrive on its shores soon.

Speaking on the sidelines of the Central European Gas Congress in Bratislava April 26, Viktor Zubkov, billed as the special representative of the president of the Russian Federation and as chairman of Gazprom's board of directors, said it would be too expensive.

Speaking as the only Russian on a panel composed of mostly east Europeans, some of his speech was given over to a defence of Nord Stream 2, a project which, he also said on the sidelines, Gazprom would continue to develop with its partners in the project in consultation with the European Commission. He said the pipeline was being unfairly discriminated against as not all gas was being treated equally within the single market. The plan for Nord Stream 2, like the already functioning Nord Stream 1, complied with all the conditions of international law, he said.

The project had come under fire from the European Commission's vice president for Energy Union, Maros Sefcovic, who said in his keynote speech that no pipelines could operate in a legal vacuum and that EC and Russian legal norms were on a collision course. He also said the project had been presented as a purely commercial project "but I have never seen a commercial project debated at such a political level." He also questioned the need for such a pipeline given a projected long-term decline in gas demand.

Zubkov said that after a four year decline, European gas demand rose by 5% last year to 426 bn m³, of which 159bn m³ came from Gazprom. Domestic gas production keeps declining and the share of Russian gas is 30% and this will go up as indigenous production declines, he said. But although Europe would remain its key market he said Russia was looking to the "mega-market" of Asia for demand and to China in particular.

"To diversity our risks including stability of EU demand we are focusing on the east," he said, mentioning development work in Yakutsk, Irkutsk and Sakhalin, to take advantage of Russian reserves. "The capacity of our gas supplies enables us to guarantee gas for years in advance for China and other countries," he said.

William Powell