• 10 mins Kuwait Greenlights Game-Changing Gas Fields Project After Years of Delay
  • 40 mins Minnesota Begins Public Hearings On Enbridge Line 3 Project
  • 1 hour China Looks To Create National Natural Gas Pipeline Firm
  • 2 hours Total Not In A Rush To Sell Canadian Oil Sands Assets
  • 2 hours DOE Seeks To Boost Usage Of Carbon Capture Tech
  • 3 hours Taxpayers Likely To Pick Up The Growing Tab For DAPL Protests
  • 6 hours WTI At 7-Month High On Supply Optimism, Kurdistan Referendum
  • 12 hours Permian Still Holds 60-70 Billion Barrels Of Recoverable Oil
  • 17 hours Petrobras Creditors Agree To $6.22 Billion Debt Swap
  • 21 hours Cracks Emerge In OPEC-Russia Oil Output Cut Pact
  • 1 day Iran Calls On OPEC To Sway Libya, Nigeria To Join Cut
  • 1 day Chevron To Invest $4B In Permian Production
  • 1 day U.S.-Backed Forces Retake Syrian Conoco Gas Plant From ISIS
  • 1 day Iraq Says Shell May Not Quit Majnoon Oilfield
  • 4 days Nigerian Oil Output Below 1.8 Million BPD Quota
  • 4 days Colorado Landfills Contain Radioactive Substances From Oil Sector
  • 4 days Phillips 66 Partners To Buy Phillips 66 Assets In $2.4B Deal
  • 4 days Japan Court Slams Tepco With Fukushima Damages Bill
  • 4 days Oil Spills From Pipeline After Syria Army Retakes Oil Field From ISIS
  • 4 days Total Joins Chevron In Gulf Of Mexico Development
  • 4 days Goldman Chief Urges Riyadh To Get Vision 2030 Going
  • 4 days OPEC Talks End Without Recommendation On Output Cut Extension
  • 5 days Jamaican Refinery Expansion Stalls Due To Venezuela’s Financial Woes
  • 5 days India In Talks to Acquire 20 Percent Of UAE Oilfield
  • 5 days The Real Cause Of Peak Gasoline Demand
  • 5 days Hundreds Of Vertical Oil Wells Damaged By Horizontal Fracking
  • 5 days Oil Exempt In Fresh Sanctions On North Korea
  • 5 days Sudan, South Sudan Sign Deal To Boost Oil Output
  • 5 days Peruvian Villagers Shut Down 50 Oil Wells In Protest
  • 5 days Bay Area Sues Big Oil For Billions
  • 6 days Lukoil Looks To Sell Italian Refinery As Crimea Sanctions Intensify
  • 6 days Kurdistan’s Biggest Source Of Oil Funds
  • 6 days Oil Prices On Track For Largest Q3 Gain Since 2004
  • 6 days Reliance Plans To Boost Capacity Of World’s Biggest Oil Refinery
  • 6 days Saudi Aramco May Unveil Financials In Early 2018
  • 6 days Has The EIA Been Overestimating Oil Production?
  • 6 days Taiwan Cuts Off Fossil Fuels To North Korea
  • 6 days Clash In Oil-Rich South Sudan Region Kills At Least 25
  • 6 days Lebanon Passes Oil Taxation Law Ahead Of First Licensing Auction
  • 7 days India’s Oil Majors To Lift Borrowing To Cover Dividends, Capex
John Daly

John Daly

Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School of Slavonic and East European…

More Info

Surging Australian Gas Prices Turn Asian Consumers Towards Russia

The world’s largest market for natural gas imports is East Asia, dominated by the economies of China, Japan and South Korea, all largely bereft of indigenous resources.

The trio’s importance to energy-exporting economies, battered by the global recession that began in 2008, has never been higher, leaving the trio to choose amongst a number of suppliers, with China favoring pipelines crisscrossing Central Asia, lessening its exposure to maritime liquefied natural gas imports from such volatile regions as the Middle East, to Japan and South Korea, currently the world’s largest LNG importer, eyeing any and all options.

Australia, previously having regarded itself as East Asia’s energy back yard, is about to experience some major “blowback” on its predatory “buy cheap, sell dear” policies, with a rising competitor being – the Russian Arctic.

The Russian Federation’s Novatek, which holds 80 percent of the Yamal LNG development license, is offering a 29 percent holding sale to help fund development.

The downside?

Related article: Environmental Issues that Could De-Rail the Natural Gas Boom

Novatek has no rights yet to export future production.

Problems with Moscow aside, Novatek is second only to the Russian Federation’s Gazprom natural gas state monopoly, being Russia’s second largest producer.

Obviously seeing its future in eastern Asia, Novatek via Yamal LNG has set up a 100 percent subsidiary company, Yamal Trade Pte. Ltd., to trade on Asian stock exchanges, with the company registered in Singapore.

The deal represents Kremlinology at its finest.

In late 2011 Novatek pressured the Kremlin to end Gapzrom’s monopoly to export LNG, currently a Gazprom monopoly. Moving at extraordinary speed for the Russian bureaucracy, earlier this month the Presidential Commission on Energy considered the feasibility of liberalizing the country’s LNG export policies, and Russian President Vladimir Putin instructed the government to study the possibility of liberalizing the nation’s export of LNG, with analysts believing that a governmental decision on the issue will be hammered out by the end of next month.

While Gazprom's current monopoly on Russian natural gas exports is seen as a major barrier to the Novatek’s sale, the fact that it is being considered at all represents an extraordinary policy shift in the Kremlin’s thinking towards dealing with companies that can move quickly to nail down Russia’s market advantage in Asia, as Asian options face rising costs, with Novatek chief financial officer Mark Gyetvay citing the rising costs of Australian projects being pursued by Royal Dutch Shell, Chevron and others making Russia’s Yamal arctic option more alluring. Earlier this week Gyetvay said, "From our experience with the Australian side we are seeing more interest from Asia-Pacific buyers to look at our project, where a year ago their primary focus would have been closer to home. We are talking to companies now in the Asia-Pacific region largely because they see that there's a huge amount of risk from all these Australian projects … that either may not come on stream, or they can get a better deal by coming into a more cost-effective, conventional onshore type development."

Related article: To Avoid Volatile Gasoline Prices, Why not use More Natural Gas?

A not insignificant threat to Australian energy expansion plans, as the country currently has nearly $190 billion of LNG export projects under construction that would add more than 80 million tons per annum of LNG production by 2020, an increase that would make the country the world's top LNG exporter.

The downside Down Under?

Late last year, three of the seven Australian LNG projects in early stages of construction announced cost hikes averaging more than 20 percent, primarily caused by rising labor costs and the strong Australian dollar.

Gyetvay sees advantage in the chaos, telling reporters, "There've been discussions over the last week with the Russian government about liberalizing the LNG markets, and we'll wait for them to come back to us, supposedly by the end of March."

Place your bets – kangaroo vs. the bear in the land of the rising sun.

By. John C.K. Daly of Oilprice.com




Back to homepage


Leave a comment
  • Ronald Wagner on February 28 2013 said:
    The eagle is coming too though.
  • Philip Andrews on March 04 2013 said:
    This article reminds me of the article in Stratfor.com;

    http://www.stratfor.com/sample/geopolitical-diary/china-and-russia-building-energy-land-bridge

    which talks of the energy relationship between Russia and China. They make the interesting point that in the event of a confrontation between China and the US, the US would likely carry out a sea blockade of China.

    This would then necessitate China relying on Russia for a large part of her energy supplies and Central Asia. Also on railways such as the TS for importing goods from the West through Russia. It might learn much from Iran about blockade/sanction survival strategies.

    The point being that the present Western: Eurasian impasse re Iran and China is probably leading the leaders of those countries plus Russia seeking ways to enlarge trade routes overland to avoid the US ability to blockade. This in turn will mean that China for example will think twice about importing energy and goods by sea if she can get them overland - a modern revived Silk Route. At present this won't make that much difference, but in the longer term, Eurasia may strive for greater internal overland trade in basic commodities to avoid hostile sea activity causing economic collapse.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News