Growing Gas Market Can Absorb All Russian LNG , Novatek CEO Says

The OAO Novatek-led Yamal LNG project will benefit from accelerating growth in demand for liquefied natural gas on world markets, which can absorb all new production from Russia, according to Chief Executive Officer Leonid Mikhelson.

He spoke at Davos, Switzerland, where he attended the World Economic Forum.

On the LNG market:

“We are optimistic about the LNG market development. LNG demand is increasing faster than the gas market in general. A competition between fuels is under way. In the past few years, gas has been losing this competition, but I think in the future the share of gas in the total energy balance will increase.”

On competition with Gazprom, Rosneft LNG projects:

“It’s deeply misleading that all these projects will compete against each other. Given the growth of the LNG market, projects in Russia could be multiplied by two, and those volumes will be in demand. Within the next 10 years Russia simply must build as much as 80 million tons a year of LNG capacity.”

On European energy policies:

“Russia is right about trying to diversify supplies to Asian markets. There is some discomfort about the European Union’s energy policy. A recent sharp increase in coal generation in Europe shows that the EU doesn’t have a strategy for energy market development. Gazprom re-orienting flows and investments will lead to Europe losing out a lot, which in fact has already happened with crude oil.”

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