Dull forecasts for Russia are provided by the International Energy Agency (IEA) – at least in part. which concerns the most important gas market for Russia.
The IEA claims that our country will lose leadership in the supply of this raw material, and the United States will take its place. To what extent can these forecasts be trusted – and why are such statements themselves an attempt to put pressure on Russia?
The global gas market this year will face the largest drop in gas demand in its entire history, according to the Gas 2020 survey, prepared by the International Energy Agency (IEA). The market will fall by 4% or 150 billion cubic meters. Even in 2009, when gas demand also plummeted, the decline was only 2%.
However, IEA experts hope that the crisis will be short-lived and the restoration of the gas market will begin in 2021. The pace of demand recovery will depend on how quickly the global economy recovers, whether there will be a second wave of coronavirus, etc. But the most interesting thing is contained in another statement of analysts: the IEA believes that in the next five years the United States will become world leaders in gas supplies, moving Russia forward.
Russian analysts are skeptical of such forecasts.
Firstly, the IEA experts are a community of oil and gas consumers, and their forecasts traditionally favor consumers, says Stanislav Mitrakhovich, senior researcher at the Financial University under the Russian government and a leading expert at the National Energy Security Fund.
Secondly, the opinion of the IEA, as a rule, is the opposite of the opinion of OPEC +. Actually, the IEA was created after the energy crisis of 1973 as opposed to OPEC. Although this is an international agency, the United States is its beneficiary. As a result, in their forecasts, the United States more and more often falls into world leaders in oil supplies and gas supplies.
However, IEA experts have already demonstrated the inaccuracy of their forecasts. For example, in 2016, Western experts suspected the agency of manipulating data, as WSJ wrote about. In the IEA statistics, a “mistake” crept in. The agency announced an excess of oil production over demand by 1.9 million barrels per day in 2015.
Half of this oil was found in oil storage tanks, in tankers and pipelines. But where did the second half of the “excess” oil go? The most likely explanation is that these “missing” barrels simply do not exist, except perhaps on the paper of MAE analysts, said then oil analyst at Standard Chartered Investment Bank Paul Horsnell.
So this time, the IEA experts clearly wishful thinking. Russian industry experts are confident that the United States will not be able to overtake Russia in the next five years in terms of gas exports. Russia will retain its leadership, despite all the difficulties faced by gas producers around the world.
“The USA is already the largest gas player in the world, which produces and consumes a lot of gas. But Russia is ahead for export. There are big doubts that the United States is able to surpass Russia by 2025. Still, pipeline export from the USA is not planned; they are betting on LNG export. If LNG prices rise, the share of US LNG in the world may increase. Especially due to the implementation of agreements with China in the framework of the armistice on the purchase of US hydrocarbons worth more than $ 52 billion. But even in this case, America in the gas market will be among those catching up with Russia, ”Mitrahovich says.
“Russian export of pipeline gas by 2025 will grow to 260-270 billion cubic meters due to reaching the full capacity of the Power of Siberia gas pipeline to China and increasing export to the European market. Demand for imported gas in Europe will continue to grow amid a reduction in its own production, the gradual closure of coal-fired power generation and a reduction in the capacity of nuclear power plants, ”predicts Vasily
Tanurkov, director of the ACRA corporate rating group.
The IEA also underestimates expectations for the export of Russian LNG – only 38 billion cubic meters. Although by 2025, Russian LNG exports will grow to 70-80 billion cubic meters, Tanurkov said. As a result, the total export of Russian gas in 2025 will amount to 330-350 billion cubic meters, the expert believes. The United States clearly does not reach such levels. “A realistic estimate of US gas exports in 2025 is 230-250 billion cubic meters,” Tanurkov said.
“Now the story of the export of American LNG is economically inefficient. The cost of liquefying gas in America was higher than the cost of gas on European exchanges, and this is a direct path to ruin. People who invested money just wait, working in the red, when the situation changes, ”says Mitrahovich.
There is a price war on survival in the gas market. However, Russia has a number of advantages over its competitors. Firstly, it is the low cost of gas production. Secondly, Russian gas goes to customers mainly through pipes, and this is the cheapest way of delivery.
“On the other hand, our competitors are companies with huge amounts of money that they are willing to spend in anticipation of improving market conditions. For example, Shell has become a shareholder in Australian LNG projects, ”says Mitrahovich.
If we talk only about the export of LNG, then in this niche the United States can really squeeze its competitors. Only at first Australia, and then Qatar, Tanurkov believes.
“Only a very long period of low oil and gas prices could prevent this, which would lead to a significant revision of LNG development plans and a long-term reduction in oil and gas production in the USA,” the expert explains.
The next IEA report shows that the IEA cannot be taken at face value.
“We live in a world of“ hyper-communication, ”when the main thing is to start and discuss the topic in the right way. The IEA issues a forecast, it is distributed by agencies, then it is picked up by the American business press, Trump’s Twitter and bloggers. And although nothing has actually happened in terms of production and consumption, everyone is sure that oil, for example, will not be needed soon or the US will be the leader in the gas market, ”Mitrahovich says.
“Whoever controls the media platforms has a lot of control over public opinion, and it in turn affects companies and prices,” adds the expert of the NESF.
Therefore, of course, it was good for Russia to create a platform for the presentation of its own examination of the world energy market and discussion.
“We have no alternative, in this regard, Russia according to world statistics is completely dependent on forecasts by the IEA or US Energy Information. However, we should not only listen to someone else’s point of view, but also analyze it ourselves, ”Mitrahovich concludes.