Russia pays high price for LNG export prize

How will the world’s largest gas exporter diversify away from pipeline supplies? Tatiana Mitrova, of the Skolkovo Business School’s Energy Centre, considers the options

Stagnating gas demand in Europe, Russia’s main export market, means the world’s largest gas exporter is coming under growing pressure to diversify its export routes. Whatever the appeal of liquefied natural gas (LNG) though, diversifying will not be easy. Russia’s location and climate do not offer the most favourable conditions for the development of an LNG business. Despite having an extensive coastline, Russia has just a few outlets to ice-free waters: in the Barents Sea, in the northwest, and in the Seas of Okhotsk and Japan, in the southeast. The extreme climate means Russian LNG projects must overcome a raft of complex technical problems. And these problems make projects very expensive.