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Gas just for us: what will happen to the Russian economy if we stop selling gas to Europe

Last year we sent more than 400 million cubic meters of gas to the EU per day, now only 75 million cubic meters

Last year we sent more than 400 million cubic meters of gas to the EU per day, now only 75 million cubic meters

A picture: REUTERS

FIRST TO YOURSELF, THEN TO OTHERS

So much gas for you: by the end of the year, not only our relations with Europe had collapsed, but also the Nord Stream pipelines. And if we sent more than 400 million cubic meters of gas per day to the EU last year, that is now only 75 million cubic meters (via Ukraine and along the Turkish Stream.

Gazprom is gradually building up gas supplies to Asia, but it is unrealistic to send the entire European volume to the east. The obvious question is: what to do with the rest of the gas?

One of the options announced by the Russian authorities in early October was the construction of a gas distribution hub in Turkey. That our gas flows through the Black Sea to the western part of Turkey, and from there to Europe.

But the project will take up to five years to complete. What to do with excess gas for that? Mothballing the deposits is not an option: people will be out of work, taxes will fall, equipment will rust and age, etc. But what if we lead the “pipe” into the country: we provide factories with cheap fuel , we gas all the villages? Maybe this is the secret to saving our economy?

THERE IS WHERE TO GROW

– Gas is an excellent resource for the development of the economy, which is under our feet, – Sergey Pikin, director of the Energy Development Fund, confirmed our assumptions.

At the same time, we immediately put the dots on the i: we are not a gas filling country at all, as some malicious people think. And the lion’s share of the gas produced is already used for domestic consumption.

– About 25-30% of the gas is exported. Gazprom sells the rest in the domestic market at profitable prices for the company. Of course, the price in the foreign market is higher, but even if we adapt to the domestic demand, it will also be profitable, says Georgy Ostapkovich, director of the Center for Market Research at the Higher School of Economics.

But another question arises here: is the country willing to accept all of its gas if it is shipped for domestic needs?

Sergey Pikin explains: there are only two ways to increase domestic consumption of blue fuel. This is the gasification of the country and the development of industrial production. But in both cases new consumers are needed.

Experts do not recommend placing high hopes on the gassing of villages. After all, in many settlements there is no gas, not because it is “sold in Europe”. The gas itself is cheap, and in bulk, the problem here is different.

– The problem is that gasification is very expensive for the population: the cost of equipment, pipes from the main road to the house … And it is unprofitable to pull a pipe to remote settlements. In many cases, it makes sense to subsidize people so that they install solid fuel boilers, bury gas tanks (refillable gas storage tanks. – Ed.), – says editor-in-chief of the Energovopros.ru portal Mikhail Kozyrev.

– Therefore, the most important thing is the development and establishment of gas-based industries, – says Sergey Pikin. – And here we have room to grow.

CHP

Today in Russia there are 79 coal-fired thermal power plants. They can be completely converted to gas. But there is a problem:

– Gas-fired power plants run on western equipment. And now there are problems with the repair, – explains Sergei Pikin.

However, we also have our own Soviet know-how: during the Soviet era, equipment for gas-fired thermal power plants was developed and put into production. The western one is considered more efficient, but there are all spare parts for “our own”, and there will be no problems with repairs. Sergey Pikin offers the following option: the CHPP receives free gas (the country will not go bankrupt), generates heat from it and buys household appliances with the money saved.

– At the same time, CHP is being updated and machine building is developing through the production of steam turbines. And then jobs appear and taxes are paid. All together will give a stronger economic effect than oil at $500 a barrel! – assures Sergei Pikin.

There is another important aspect here. Gas is a more environmentally friendly resource than coal and fuel oil. And the transition to gas will increase our prestige on the world stage, because now the fashion is for environmental friendliness. We will be in trend, not coal soot!

PACKAGE

The production of polymers requires gas – these are complex chemicals that are used in all industries: machine building, textile industry, agriculture, medicine, automotive, aircraft construction, etc. After all, banal packaging is also a polymer.

– And there are also energy-intensive industries – metallurgy, paper, glass industry. They now need development in the face of import substitution, – says financial analyst Mikhail Belyaev. – And if we switch them to gas to get cheaper energy, then we will significantly reduce production costs and it will be more competitive.

FERTILIZERS

Gas is an excellent raw material for nitrogen fertilizers. They are based on ammonia, which until recently was extracted from coke oven gas. It was produced in metallurgical enterprises, and therefore “fertilizer” plants were built next to such industries.

Now the technology is being developed to obtain nitrogen fertilizers based on natural gas, the cheapest in the world. So why shouldn’t Russia, which is rich in natural gas, flood its country and the whole world with cheap fertilizer? By the way, they have not fallen and will not be subject to any sanctions. There will be no fertilizer – hunger will come. And they will not stop buying them, because this is a matter of life and death.

“We can develop our own technologies for the production of fertilizers (based on natural gas – ed.) in two or three years,” he assures. Sergey Pikin. – And it will also be much more profitable than selling piped gas to Europe.

Listen to “Russian Dollar” with Sergey Mardan on Tuesdays at 7pm

INCIDENTALLY

Asia not an option?

Of course, as you have heard a hundred times, in terms of foreign trade, Russia is now turning east. And China and India (and Malaysia, Thailand, Vietnam) with their developed industry need gas very badly. Will it be possible to send “European surplus” there?

We already have the Power of Siberia gas pipeline from Yakutia to China. But its power is limited. So last year, 10 billion cubic meters of gas passed through to the east, while 150 billion cubic meters went to Europe via gas pipelines.

– In order to transport large volumes of gas to the same China and India, it is necessary to strengthen the gas pipeline, build new routes and pipelines. But will they take this gas? For us, Gazprom is a monopoly, but for China it is one supplier among many. It gets gas from Turkmenistan, New Zealand, Australia, etc. In addition, there are countries that supply it with more gas than Russia. The same goes for India. She also has a large selection of suppliers. And it’s not a fact that she will make a choice in our favor, “says George Ostakovich.

QUESTION – EDGE

What about the budget?

– Oil plays the main role in filling the budget at the expense of export earnings, – explains judge Sergey Pikin. – Gas did not take such a large share, so the losses (in case of refusal to import. – Ed.) will be small.

Last year, according to the Federal Customs Service, Russia earned $493.3 billion from exports, of which $110 billion was from oil and $55 billion from gas. On the one hand, this is really not critical: 11% of exports. On the other hand, this is almost half of the state’s annual expenditure on insurance pensions.

So the money from gas exports won’t get in our way anyway. And it is better not to go to extremes and completely block deliveries abroad.

– When you sell products for export – gas, shoes, tower cranes – you don’t just get currency. This creates more jobs than relying solely on the domestic market. Foreign trade always involves high taxes. Every economically developed country pays a lot of attention to exports. Therefore, it is better to do everything: both gasify the country and export gas, – sums up George Ostakovich.

By Peter Kavinsky

Peter Kavinsky is the Executive Editor at cablefreetv.org