"There is enough place for everyone" - what will give the growth of China's gas market for Russia?

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"There is enough place for everyone" - what will give the growth of China's gas market for Russia? 18.04.2018 14:07


The growth of the gas market in Asia will create enormous opportunities for all energy suppliers in the region. As the correspondent of IA REGNUM reports, this was stated by the member of the Expert Council on Corporate Governance of the Central Bank of the Russian Federation, on April 17, former Vice President of LUKOIL Andrey Gaydamaka at the Second Sochi Eurasian Integration Forum "Prospects for the Development and Strengthening of the Shanghai Cooperation Organization".

“Gas consumption in China in 2018 will be more than three Germany and 4-5 of England or France. This is a giant leap, which this country has already passed in the last 15 years. The next in the future, although China will continue to develop at a huge pace - will be India and Pakistan. These markets, especially China and India, will become the largest promising markets for Russian and regional natural gas - not only from Russia, but also from Turkmenistan, Iran, Kazakhstan and Uzbekistan", Gaydamaka said.

One Chinese market should grow from today's 220 billion cubic meters to 700-900 billion around 2030, which should be ten times more consumption than in Germany at that time.

"I see a lot of research from our Anglo-Saxon friends who say that there is a lot of competition between Turkmen gas, Iranian gas, Russian gas ... I've worked as a vice-president for 15 years in Lukoil, and as an independent analyst I can say, that this is simply not the case. There is no competition at all - the markets are so huge. There is enough place for everyone. Cooperation between the countries that are present here is very important. And then I am sure that this economic growth will be achieved", the expert said.

According to him, Russia presents interest to international consumers not only as a country with huge gas reserves, but also the best technologies for its production and transportation to date. At the same time, despite the difficult political situation on the territory of the former USSR with the collapse of the country and civil wars, the gas supply of large industrial centers and regions has never been interrupted.

However, the key weakness of the Russian economy is expressed in its dependence on the Western financial market. So, over the past 25 years, large Russian investments have received the lion's share of long-term investments precisely in the West, receiving there funds for investment at a very low interest.

"At the same time, quite a large number of Russian citizens also kept their money, too, in general, not in Russia. There was a very interesting system when citizens store funds in Anglo-Saxon jurisdiction, and only then from Anglo-Saxon jurisdiction they invest in Russian companies. This is the system that we ourselves built ... Now it is very important to change this system, and huge efforts in this regard are made, in particular, by the Central Bank - the "MIR" system and so on. But it is very important to re-create our own system of domestic investment. This is the most important economic issue. And here we too can cooperate much more actively with the countries of the region with the already developed large financial markets such as China, such as India", Gaydamaka stressed.

The gas industry of Russia is also interested in the development of the SCO, he stressed. Since huge pipeline and energy systems are extremely vulnerable from the point of view of terrorist and military threats, such systems cannot develop without peace in a certain territory.

"Having huge potential for the development of the regional pipeline system, including conflicts including in Afghanistan and other countries, all this hampers the development of regional pipeline systems and is a huge brake on the further economic development of the countries of the region", the economist is sure.

"Pipeline systems are not built by small private companies - this is possible only within the framework of cooperation between large structures, both corporate and government. And if we do not deal with issues of state cooperation within the framework of the SCO, then, it turns out; we do not do anything at all. These large systems are possible only through the cooperation of large corporate, financial, investment and government institutions", he urged.

According to him, right now Russia without reconnaissance and additional investments in infrastructure can produce 100-120 billion cubic meters of gas more and have about $40 billion in additional revenue, for which one does not even need to invest anything.

"There are just giant, absolutely gigantic economic opportunities. And we must supply these 100-120 billion m3 to China, India, Pakistan and other countries of the region. And for this we need to live our own mind, do our own calculations and make our own investment system", Gaydamaka pointed out.

According to him, the lack of high-quality domestic analysts on the dynamics of the energy market is another pressing problem for Russia.

"A consortium of international agencies is one of the most famous is constantly raising its own forecast (regarding the long-term development of energy). "Lukoil" is the only Russian company that makes materials on the long-term vision of energy development. We invest tens of billions of dollars in those issues that are important to us and we publish what we believe in", he said.

"When they accuse Gazprom, that it builds its pipes in the wrong direction, I constantly remind you: you have to live with your brains, do your predictions, and do not use the forecasts of those agencies that are not particularly interested in our region. No conspiracy theory - they just do qualitative research on their regions. And in our region we have to do the research ourselves", the expert concluded.

On 17 and 18 April, the Second Sochi Eurasian Integration Forum "Prospects for the Development and Strengthening of the Shanghai Cooperation Organization" is being held. About 200 representatives of 17 SCO member countries, observer countries, as well as partner countries for dialogue take part in it.