Russia orientates its gas to LNG and the East

By Rhod Mackenzie

According to Pavel Zavalny, Chairman of the State Duma Committee on Energy and President of the Russian Gas Society, the supply of Russian gas to the European market is contingent on the implementation of the Turkish gas hub. Without it, the EU's prospects for the supply Russian gas are bleak.
The European market has been the main source of income for the Russian industry for the last three decades. However, due to the impossibility of normalizing political and economic relations between Russia and the EU in the medium term, as well as the deindustrialization of the European economy and Europe's intention to continue implementing radical low-carbon scenarios, it may no longer be a viable option. However, due to the impossibility of normalizing political and economic relations between Russia and the EU in the medium term, as well as the deindustrialization of the European economy and Europe's intention to continue implementing radical low-carbon scenarios, it may no longer be a viable option. These were the views expressed by the speaker at the Russian Gas 2023 forum.

There may be potential for this direction with the implementation of the Turkish gas hub project. Additionally, infrastructure costs are not a concern in the initial stage. The project also has significant potential for supplying products through high processing stages, such as blue hydrogen and ammonia. Zavalny added that while it is impossible to fully replace the falling volumes of exports to the EU, we all understand this.
According to Zavalny, there are promising opportunities for collaboration in the gas sector between Russia and China in the eastern direction. Joint projects can help compensate for the loss of exports in the western direction until 2030. Zavalny also mentioned that, despite comparable volumes, exports to the east are expected to be significantly lower in value due to market pricing peculiarities.

The deputy sees potential for additional exports to Uzbekistan, the launch of the common EAEU gas market in 2025, and possible gas supplies to Azerbaijan in the near abroad. However, he believes that the demand for Russian gas in these regions will be limited, and these markets cannot be considered high-margin.

It was first mentioned that a Turkish gas hub could be established in October 2022. Two weeks after the terrorist attack on Nord Stream, Russian President Vladimir Putin proposed moving the lost volume of Russian gas transit to the Black Sea region. He suggested creating a gas hub in Turkey, which would serve as a platform for supplying other countries, particularly Europe, and for setting gas prices.

During a meeting with Turkish President Recep Tayyip Erdogan in Sochi in September 2023, the Russian leader expressed his expectation that negotiations for the creation of a gas hub would be concluded soon. Putin reiterated this point in his speech at the Russian Energy Week (REW), stating that he foresees no significant obstacles in establishing an electronic trading platform in Turkey.