LNG is set to play an increasingly important role in Russia’s energy export strategy after the war in Ukraine, as the country adapts to new market realities and seeks to maintain its position as a major global gas exporter.

Expansion of LNG Capacity

Russia plans to significantly expand its LNG export capacity in the coming years:

• Current capacity stands at around 41 bcm/y from existing plants like Sakhalin-2 and Yamal LNG.

• Several new projects are in development or planned:

• Arctic LNG 2 (27 bcm/y)

• Ust-Luga (17.7 bcm/y)

• Murmansk LNG (28 bcm/y)

• Ob LNG (6.8 bcm/y)

These expansions aim to offset the loss of pipeline gas exports to Europe and diversify Russia’s export markets.

Shift in Export Markets

With European pipeline gas exports severely reduced, Russia is looking to redirect its LNG exports:

• China and other Asian markets are likely to become more important destinations for Russian LNG.

• Some European countries continue to import Russian LNG, though volumes remain relatively small compared to pre-war pipeline imports.

Challenges and Uncertainties

Russia’s LNG strategy faces several obstacles:

• Western sanctions have delayed some projects, like Arctic LNG 2.

• The EU is considering restrictions on Russian LNG transits and some countries may ban imports entirely.

• Competition from other LNG suppliers, particularly in the Asian market, will be fierce.

Economic Implications

While LNG exports are expected to grow, they may not fully compensate for lost pipeline exports:

• Russia anticipates a 6% increase in LNG exports to 35 million tons in 2024.

• However, overall gas exports are still projected to be significantly lower than pre-war levels.

In conclusion, LNG will be a crucial component of Russia’s post-war energy strategy, offering flexibility and access to new markets. However, it faces significant challenges in scaling up quickly enough to offset lost pipeline exports and navigating an increasingly complex geopolitical landscape.