Global energy bosses send Trump a message: World needs Russian gas

Saudi Arabia's Minister of Energy, Industry and Mineral Resources, Chairman of the Board of Directors of Saudi Arabian Oil Company (Saudi Aramco) Khalid A. Al-Falih (L), Russian President Vladimir Putin (2-L), Royal Dutch Shell CEO Ben van Beurden (3-L) take part in the plenary session 'Sustainable energy for a changing world' during the Russian Energy Week international forum at the Manege exhibition center in Moscow, Russia, 3 October 2018. [Kremlin pool/EPA/EFE]

Global energy bosses assembled in Moscow on Wednesday (3 October) said the world needs Russian gas to keep the lights on, in a clear message to US President Donald Trump who has warned he may impose sanctions on Russian gas export projects.

Trump’s administration, citing what it calls Russia’s failure to act as a good global citizen, has said it may take steps to block the Nord Stream 2 gas pipeline, which will increase the volumes Russia can export to northern Europe.

Trump begins NATO summit with Nord Stream 2 attack

US President Donald Trump launched a strong verbal attack on Germany on Wednesday (11 July) for its support to the Nord Stream 2 gas pipeline, aimed at bringing more Russian gas to Germany under the Baltic Sea.

The US position has prompted a backlash from the Kremlin, and from business groups in Germany, and on Wednesday leading figures in the global energy industry attending a forum in the Russian capital joined the chorus.

While not explicitly singling out Trump’s policies for criticism, they said Russian gas was a vital part of the energy mix and that liquefied natural gas, touted by Washington as a viable alternative, was too expensive.

Royal Dutch Shell CEO Ben van Beurden said if the US imposes sanctions on export projects, his company will have no choice but to abide by those restrictions.

But he added: “It’s clear that Europe will need more imports, indigenous production in Europe is in decline, we will need to import in Europe from multiplicity of sources.”

“Russia has been a very reliable supplier of gas for many decades … The cost of supply of Russian gas is probably one of the most competitive,” he said at the forum.

Patrick Pouyanne, chief executive of French oil major Total, said LNG produced at Russia’s Yamal project was highly competitive, with more competitive projects still to come.

“I think it’s just only (the) start of the story and this will be one of the largest provinces for natural gas in the world.”

Saudi praise  

Both Shell and Total have a vested interest in keeping Russian gas flowing to world markets. Shell is an investor with Russia’s Gazprom in the Sakhalin-2 LNG project off Russia’s Pacific coast, while Total is an investor in the Yamal project.

Saudi Arabia is Russia’s rival on the global oil market, but Saudi Energy Minister Khalid al-Falih, who was also at the energy forum, said the world needed Russian gas.

He said national energy firm Saudi Aramco wanted to be involved in delivering Russian LNG to world markets, including to Saudi Arabia.

Russia invests in LNG project to ‘diversify’ from Europe

Russian President Vladimir Putin has ordered the government to expand tax breaks to more deposits that will supply gas for the Novatek-led liquefied natural gas project in Russia's Yamal peninsula, according to the Kremlin's website.

“There are great resources, great conditions (in Russia) and the market forces here in Russia are very conducive to globalisation and to allowing this competitive healthy process of bringing the cheapest resources to the markets,” he said.

The Trump administration has sought to sanction Russian export pipelines before, but stayed its hand after intense lobbying from the European Union (EU) and business groups. But the issue has returned to Washington’s agenda this year.

Russian President Vladimir Putin told the forum that Russian gas exports to the EU would this year reach a record level of 200 billion cubic meters.

He said that LNG imports from the United States were 30% more expensive than Russian gas, and that the German economy would be rendered uncompetitive if it had to rely on the US imports.

Referring to the US President’s warnings of sanctions, Putin said: “I understand Donald, he’s fighting for his country’s interests, for his industry, and he’s right to do that.”

“But in this case American LNG on the European market is more expensive, not by a bit but by 30%. That’s way too much.”

Kurz in Moscow

Reuters) – Austrian Chancellor Sebastian Kurz, who is on a Moscow visit, said on Wednesday, said all European countries participating in the Nord Stream 2 pipeline project supported it, TASS news agency reported.

“I want to assure you, that European countries, participating in this project, support it. They regard it positively, and want to implement it together,” Kurz was quoted as saying.

The interests of Ukraine in the matter must also be upheld, he said.

Gazprom and the Austrian company OMV signed an agreement of assets sale in the margins of the visit. Reportedly, OMV has agreed to buy Siberian assets from Gazprom instead of swapping them, the Austrian oil and gas group said.

In 2016, OMV agreed to swap 38.5% of its Norwegian assets for 24.98% of the Russian company’s Urengoy gas field. Sources told Reuters in May that the Austrian group might buy the assets outright after Norway voiced opposition to the asset swap plans.

The purchase price will be “negotiated in good faith”, OMV said in a statement.

Austria holds the rotating Presidency of the Council of the EU.

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