Gas Export Potential of Russia's East: Will it Match Asia-Pacific Markets?

Abstract

Russia's Far East and East Siberia are emerging as new major sources of gas supplies for East Asian energy markets. Thanks to ongoing and earmarked resource and infrastructure developments in Sakhalin, Yakutia (Sakha) and Irkutsk, by around 2020 these poorly developed but naturally endowed areas of the country's East can provide between 50 and 70 Bcm/yr (5-7 Bcfd) of natural gas, including up to 10 Mt/yr of LNG, available for exports to neighbouring Pacific countries (primarily to the PRC, Japan, South Korea as well as to Taiwan and the U.S. West Coast). This can noticeably reshape today's matrix of the Asia-Pacific energy flows and even destabilize the regional gas market. GAS RESOURCES: MAGNITUDE AND CURRENT USE The region's energy hopes are mainly pinned on developing its natural gas endowment, which is fairly impressive. At present, there are more than 90 known gas fields in the RFE, including 30 in the Republic of Sakha (formerly Yakutia), 55 in the Sakhalin region (on and off the island) and a few more discovered on the Kamchatka Peninsula, in the Magadan region and in the Khabarovsk territory (see Map). Initial potential gas resources in the RFE are estimated at about 24 trillion cubic meters (Tcm) 1. Remaining explored reserves (category A+B+C 1) amount to 1.6 Tcm; preliminary evaluated reserves (category C 2) contribute another 0.7 Tcm; while prospective and predicted reserves (category C 3 and group D corresponding to undiscovered recoverable resources) approach 21.6 Tcm 2 (see Table 1). The explored gas potential (category A+B+C1) is located mainly in Sakha (0.9 Tcm) and in Sakhalin (0.6 Tcm). So far, with cumulative gas production of just over 70 Bcm, the region's original explored reserves have been depleted by only 4%. A considerable portion of the RFE's gas reserves is bound with oil-gas-condensate fields. In turn, virtually every relatively large gas field in the region contains gas condensate in volumes sufficient for commercial production. As of January 1, 2000, current explored (A+B+C 1) reserves of condensate were estimated at about 41 Mt in Yakutia and 45 Mt in Sakhalin (almost exclusively offshore). Bearing in mind that the slated development of Sakha's gas resources is likely to be coupled with the tapping of East Siberia's gas potential, it is noteworthy that the latter is pretty comparable with that of the neighbouring RFE. Potential gas resources 1. As of 1/5/2001. 2. Included McDermott (USA) and Marathon (USA) until April 1997 and June 2000 respectively. 3. Until August 1997 a foreign partner was represented by ÖMV (Jakutien) Exploration (Austria).

Oil outlook to 2025

“…Indeed, under the terms of a Memorandum of Understanding signed with the Government distribution monopoly, Transneft, and the Russian Ministry of Energy in June 2003, this project would aim for an ultimate capacity of 3 mb/d. 18 This oil would be destined mainly for US markets, and it is known that the US Government strongly supports this project. Tension with Transneft has been a key obstacle in the past, as it was originally proposed that oil companies should build and operate this pipeline privately.…”