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Top manager of Shell: Russia is able to increase its share in the global LNG supplies to 20-25% of the market

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As stated by Mario Mehren, the CEO of a German-based Wintershall Dea, before the end of the year the companies participating in the Nord Stream 2 project are likely to receive permission from Denmark to build a gas pipeline in its territorial waters.

Nonetheless, the situation evolving around two gas pipes, the combined capacity of which is 55 billion cubic meters of gas per year, is quite difficult. On the one hand, European countries feel the pressure to replace coal in their energy balance, as according to the Paris agreement they are supposed to stop burning it. On the other hand, both the EU and USA keep constantly reminding of diversification needs - most notably in regards to energy imports from Russia.

Taking into account the current situation and the circumstances, the expansion of the pipeline system towards the Western countries seems a little unrealistic. Some experts say that the only viable opportunity to maintain and increase the country’s share on the global gas market is the development of the LNG energy segment, which is currently growing at the rate of 8 to 10% per year. This growth rate is expected to continue, at least in the nearest future. In 2018, global supplies of liquefied gas reached a record level: 432 billion cubic meters or 313.8 million tons. By 2035, according to expectations of analysts from Ernst & Young, global supplies may increase by three-quarters of the current level.

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Maarten Wetselaar, Integrated Gas & New Energies Director at Royal Dutch Shell, in his interview to ”Forpost” provided his view on what means of transportation of natural gas would be the most advantageous for Russia.

- What would be your estimate of Russia's breakthrough in the LNG market segment and what would you say of the future prospects for expanding the share of our country in the global LNG market?

- Undoubtedly, Russia has the largest gas reserves in the world and it deserves to play a leading role in the energy business. However, if we talk about LNG segment, Russia is slightly behind such countries as, for example, Qatar, Australia and the US. These states have made significant progress and these countries are the leaders in LNG supplies. The gap between these countries and Russia is yet to be overcome. However, I believe that in the future your country will be able to increase its share in the liquified gas supplies to 20-25% of the global market.

- In your opinion, which type of gas transportation – via pipelines or LNG - seems more future-oriented?

- Historically, transportation was carried out through gas pipelines, and they will continue to play a significant role in the delivery of raw materials to the areas of processing or consumption. Although if we look at the future perspectives and assess current requirements, it becomes clear that there are some very remote areas, and pipeline transportation to those areas is actually impossible. Therefore, global demand in liquefied natural gas will obviously grow faster than demand in pipeline gas.

- Do you think that transition to alternative energy sources can result in lower gas demand?

- The share of gas in the global energy market is about 20% and coal constitutes 30% of the market. At the same time, solar energy accounts for only 1% of the energy market. During the energy transition process, gas consumption will be growing but coal consumption will be decreasing, and the share of coal in the energy mix will be actually decreasing a lot faster than the share of renewable energy sources will be increasing. Therefore, in the nearest future we will be definitely consuming more gas than now.

- When will the prices on LNG match the prices of pipeline gas?

- It is already happening. In Europe, both pipeline and liquefied gas are in use, and the price on either of them is absolutely the same. As for the other world regions, pricing largely depends on geographical location and current market conditions. Thus, it is rather unlikely that gas prices will be the same everywhere.

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- A visit to Saint-Petersburg Mining University was planned to be a part of your trip to Russia. What was the purpose of your visit?

- Most of all, I wanted to learn more about the opportunities that your university provides and, to be honest, I met a number of talented researchers as well as I saw for myself that the level of expertise and scientific experience is quite high here. Quite a few areas of research, in which the Mining University is engaged, fully comply with the problems our organisation is dealing with.