Russia is consistently implementing its strategic goal of dominating Europe’s gas market. After winning the Nord Stream 2 case, Gazprom will launch a major new gas investment.
Twelve billion dollars, or 900 billion rubles, from the National Prosperity Fund (FND) may go to Gazprom for the construction of the Ust-Luga gas complex, Bloomberg news agency reports, citing its sources in Russia. The funding for the project, which Gazprom will secure jointly with the Rotenberg brothers (some of Vladimir Putin’s closest men), is to be granted for three years.
The scale of the project is enormous. The complex near St. Petersburg is to process 45 billion cubic metres of gas every year. From this, it will produce over 19 billion cubic metres of methane, 13 million tonnes of LNG (as much is produced today by Gazprom’s only LNG plant – on the far eastern island of Sakhalin), over 2.2 million tonnes of liquefied hydrocarbon gases and about 4 million tonnes of ethane. The ethane will be processed at nearby chemical plants.
Gazprom CEO Alexei Miller requested public money for the project more than two years ago: in August 2019, he wrote a letter to then-Prime Minister Dmitry Medvedev, estimating the cost of the entire investment at 2 trillion roubles ($30 billion), the Vedomosti newspaper wrote.
However, the pandemic, recession, budget crisis and uncertainty over Nord Stream 2, put those plans on hold. Now the project is part of the Kremlin’s plans to open the national piggy bank (FND) in order to accelerate economic growth. The Russian government plans to spend 1.4 trillion rubles ($20 billion) from FND on infrastructure construction and investment projects.
Finance ministry and central bank officials have calculated that this amount is the maximum that can be poured into the economy without threatening to further accelerate inflation, Bloomberg sources said.
The Ust-Luga complex will allow Gazprom to quickly supply its LNG to the European market. No other leading supplier of liquefied gas to Europe – neither Qatar, nor Algeria, nor Nigeria, nor the US – will be able to compete with Russia here. The Russians will thus dominate yet another energy market in Europe. And if anything happens, all they need to do is turn off the relevant tap or stop another gas tanker at the port.
By Martn Chomsky (photo: Gazprom)