more than 1 trillion cubic meters of gas will be delivered to China via the eastern route.
“This contract will satisfy a fraction of Chinese future gas demand, but this is still huge, about a quarter in current figures and about 10 percent in 2020. However, we believe that besides pipeline gas there will be enough space for Russian LNG exports both in the Chinese market and in Asia in general. Our new project, like Vladivostok LNG and the construction of the third train at Sakhalin-2 plant will serve to meet the demand of the energy-hungry Asia,” Medvedev explained.
He added that the investment decision on Vladivostok LNG with the plant capacity of up to 15 million tons per annum was taken already and the plant would be put into operation at the end of 2018. Medvedev also singled out the future plant’s excellent geographic position, which gives it a clear competitive advantage.
The official also said that Gazprom and Shell, the partners in Russia’s only LNG-producing project to date, Sakhalin-2, had in February signed a road map for the FEED documents, paving the way for the project’s expansion.
“Our country is able to provide our partners in the East with reliable and environmentally-friendly for decades or even centuries. Just a small example: [Siberia’s] Kovykta and Chayanda gas fields possess discovered resources of 3 trillion cubic meters, which can be compared to total gas reserves of such a mature LNG player in Asia-Pacific as Indonesia. The future production at the two fields will be not only used for pipeline gas supply to China and local consumption in Russia, but also to source our LNG projects,” Medvedev said.
He stressed that the Sakhalin Island is no less promising hydrocarbon province with a great potential to increase proven reserves. According to the executive, geographical proximity to consumers’ market is an advantage for Russian LNG exports. Today, an average shipping leg for Sakhalin LNG is about 1,000 nautical miles versus more than 5,000 nautical miles for Qatari LNG and 13,000 nautical miles for future U.S. LNG via Suez Canal or more than 9,000 nautical miles via Panama.
The outlook for Russia is good, believes Medvedev, as economic growth in Asia’s leading gas-consuming countries continues to fuel demand. “The share of gas in power generation is gradually growing in Japan and inter-fuel competition remains strong. China, which has recently become the top oil importer in the world is now placing an even higher emphasis on the use of natural gas. Gas and oil compete in all the sector of the South Korean energy market. India, with the gas market still in infancy, is consistently gaining momentum and oil vs. gas competition is also emerging here,” the official said.
“Nowadays, gas finds more and more previously unused or underestimated market niches like gas for transportation, not only in cars and trucks, but also in maritime transportation as well as a small-scale LNG. Asia is not an exception. We witness the fastest-growing interest for gas as