Last weekend Putin proposed raising Russian gas exports to
Europe by 60 million cubic meters per day to allow higher flows of liquefied
natural gas to Japan, which is battling a nuclear power crisis after a huge
March 11 earthquake.
Analysts questioned, however, whether more volumes were
needed in Europe after Gazprom had already stepped in to cover the loss of 2
percent of Europe’s supply caused by the conflict in Libya.
“Gazprom has enough resources to accomplish Putin’s proposal
on a swap operation in Europe,” a spokesman for Gazprom Export told Reuters.
“Gazprom increases gas deliveries through pipelines to
Europe, so some LNG cargoes directed to Europe could go to Japan. If additional
need of Japan will be confirmed our representative will immediately contact our
European partners.”
Russia is the world’s largest natural gas producer but the
lion’s share of its exports is pumped by pipeline to the European Union and
Turkey, to which it exported 139 billion cubic meters (bcm) of gas last
year. It has a single operational
LNG project, Sakhalin-2, which is located close to Japan but whose annual
production of 10 million tons is already largely committed under long-term
contracts.
Deputy Prime Minister Igor Sechin, who has sweeping powers
over the energy sector, has said Russia could ship an additional 200,000 tons
of LNG to Japan in the form of energy aid. Russia’s proposal to ramp up pipeline exports would require
the support of the European Union, as well as a concrete need on the part of
the Japanese, to be workable, Gazprom Export said.
Gazprom meets around a quarter of Europe’s gas needs, but
its exports have been hit by the global recession and a glut of LNG from Qatar.
It aims to claw back some of those losses this year by boosting exports by 15
percent to 152 bcm.
Industry analysts questioned, however, whether the need for
extra European supply was actually there, with demand likely to taper off as
the region emerges from the winter heating season.
“The winter consumption peak has passed and there is a gas
glut,” said Mikhail Korchemkin of East European Gas Analysis. Japan’s capacity to ramp up imports of
LNG is, meanwhile, limited and analysts at Societe Generale estimate its
incremental import needs at a relatively modest 5 bcm this year, rising to 10
bcm in 2012.
“Japan has neither enough regasification capacity nor
storage facilities. This should be taken into account,” said Valery Nesterov,
an energy analyst at Troika Dialog in Moscow. The EU would be unlikely to rush into accepting a proposal
that runs counter to its long-term goal of diversifying away from its
dependence on Russian gas supplies, Nesterov added. Among major European buyers of Russian gas, Germany’s E.ON
said its needs were well covered by supplies from Russia, Norway, the
Netherlands and domestic German production.
“The additional volumes which Putin mentioned for Europe are
meant to compensate for lost LNG volumes to Europe,” said a spokesman at E.ON
headquarters in Essen, Germany. “The Russian government will talk to the EU in
this context.”
