DOMESTIC MARKET OF LIQUEFIED NATURAL GAS: CURRENT STATUS, TRENDS OF CONJUNCTURE

Introduction

LNG market attracts the attention of experts and analysts of the energy market, both internationally and in Russia. The prospects of the use and the need for infrastructure development are discussed in scientific journals Energy Strategy Reviews [21, 15], Energy Policy [14, 2, 22, 4], Applied Energy [20, 3], Energy Economics [11, 13] and Springer-Verlag [8, 24]. Global trade network of LNG market was dynamically analyzed in the works of foreign specialists Jan Bo Jang, Quang Ji and Ying-Phan [3]. Italian researchers S. Boussenac and K.Lokatelli in their work assessed the extent of the impact of institutional and organizational changes in the EU and Russia on gas relations [14]. American experts R.Barns and R.Bosvors studied regional LNG markets by using gravity model [13]. Internal market of LNG is studied in articles by O. Vinogradova [19], T. Mitrova [6], N. Podlevskikh [7], L. Slavinskaya [16]. However, after studying trends in the LNG market, the authors can conclude that the issue of LNG market has received little attention among Russian scientific researchers. Meanwhile, it is obvious that the LNG market is young, promising and relevant in terms of economic research.

Methodology

In the article were used scientific research methods, such as analysis and synthesis, systematic approach to the study of market factors at the macro level and in the domestic market, historical and logical, graphical methods. The article describes the characteristics of operating and design companies, which produce liquefied natural gas in Russia, the analysis of the dynamics of the internal market of liquefied natural gas, formulate conclusions and future research directions.

Main research areas

Interest in the liquefied natural gas as the object of study from an economic point of view was caused by several reasons. Specificity of liquefied natural gas (LNG) is that gas as a commodity on the commodities market presented in liquid form. This provides a rational transport and storage, as well as the possibility of its use as a motor fuel. Avoiding expensive construction of pipeline systems, LNG could provide gasification of objects, which are situated far away from the main pipelines by creating a reserve of LNG directly at the consumer.

According to experts, the ability of using LNG as a fuel, has the following advantages over gasoline [17]:

— LNG is less dangerous to the ecosystem as a fuel (burning gas produces less carbon dioxide than burning gasoline);

— LNG is cheaper than gasoline (using large amount of gas offsets losses with a decrease in state tax revenues from the sale of petroleum products).

In addition, Russia has the biggest natural gas reserves in the world. Widespread use of gas will help to increase Russian foreign state influence on the world stage in the long term, because explored reserves of natural gas in Russia is bigger than the oil reserves.

Findings and interpretation

In Russia, work on the development of technologies and production of liquefied gas are conducted more than 10 years, the construction of the first LNG plant began in 2006 in the South of Sakhalin – «Prigorodynoe» industrial complex. The plant has two production lines with a capacity of 9.6 million tons/year (equivalent to 13 billion cubic meters of gaseous natural gas). All «Sakhalin-2» gas is contracted by customers, mainly from Japan. Construction and commissioning of the third technological line will be realized in the nearest future [10].

The development of the Far East and far North projects means the implementation of «Vladivostok LNG» project (power plant of at least 10 million tons/year; the planned launch in 2018) and «Yamal LNG» project (with a design capacity of 15 million tons/year; the first phase of construction is slated for delivery in 2016).

In recent years, the LNG production in Russia was about 10 million tons. Its only 4-5% of world production. At the same time, according to analysts, the demand for LNG in the foreign market is growing and by 2030 could reach 400 million tons. With the implementation of LNG projects «Sakhalin-2», «Yamal LNG Vladivostok LNG» and temporarily «frozen» «Shtokman» field, Russia will be able to gain 20 — 25% in this segment of the market [10].

In the framework of the «Sakhalin-2» project the ownership of the oil and gas belongs to the Russian Federation. A controlling stake in «Sakhalin Energy» is owned by Gazprom, which has a monopoly on LNG exports, in the absence of other projects [10, 18].

Over the past few years the Asia-Pacific countries have become the largest consumers of liquefied natural gas. According to the National Energy Security Fund, the share of gas in the energy balance of the Asia-Pacific region is about 11%. Russian oil and gas companies expect that by 2020 the demand for LNG in the Asia Pacific region will double again [17]. Japan occupies the major share in the import structure .

Domestic market is still lacking of competitiveness. On the market, Gazprom’s main competitors are countries such as Qatar, Australia, Indonesia and Malaysia. However, Russia has the biggest natural gas reserves in the world. Widespread use of gas will help to increase Russian foreign state influence on the world stage in the long term, because explored reserves of natural gas in Russia is bigger than the oil reserves. That`s why the authors noted options of studying of liquefied gas as the object of research at the micro and macro levels, formulated possible directions of research that may be subject to more deep knowledge in the economy of economic entities for production of LNG, regions and countries.

Conclusion

Thus, we can make a conclusion that, Russia occupies a certain share in the market of liquefied gas, despite a declining trend in energy prices on the world market and the lack of sustained increasing trend in production and exports. Main priorities are the task of fixing this share, as well as infrastructure development and the development of technologies for production equipment, ensuring the use of LNG as a motor fuel in the domestic market. Formation of methodological approaches to the study of fluctuations in domestic and global market for liquefied natural gas is very interesting from a scientific point of view.

References

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