Conflicts in the global gas markets have intensified, especially after Qatar’s failure to establish a gas export organization similar to Opec. Natural gas is especially important given its increasing leverage in global energy balance as a basic component of relatively clean energy.
Reports clearly indicate that Russia is the most likely to have a final say in this industry in the coming decades compared to other major gas exporters - Qatar, Iran and Algeria - and emerging players such as the US and Australia. This is due to many geographical factors.
Some future-focussed policies adopted by gas exporting countries prove this. Russia has one of the world’s largest natural gas reserves, and is the leading gas supplier to Europe. It dominates 40 per cent of European gas imports through a pipeline that runs through Ukraine.
Pressing for more
This was not enough for Russia. Rather, its projects that were recently implemented or under implementation far exceed the export capacity of the Ukraine pipeline.
In December, the Russian and Chinese presidents inaugurated a new pipeline, called “Power of Siberia”, to supply China with Russian gas, which travels 2,000 kilometres from Siberia to China and will be extended in the future to 3,000 kilometres at a cost of $55 billion. Moreover, Russia and China signed a 30-year agreement worth $400 billion to provide China with 10 per cent of its gas needs.
Meanwhile, in the west, in addition to the Ukraine pipeline, which has caused political crises and gets interrupted from time to time, there are two important lines being built between Russia and Europe. The first is the Nord Stream line that crosses through the Baltic Sea, while the second is called South Stream, and runs through Turkey, Romania and the Baltic countries, all the way to Italy.
US flexes its new muscle
These lines are strongly opposed by Washington under the pretext of “European Energy Security”, despite the fact that there are economic and commercial reasons behind this opposition. Recently, the US has become one the most important gas exporters thanks to its production of shale gas. However, it lacks the advantage of offering cheap transportation through pipelines.
Pipelines are better in terms of price and ease of transporting than using expensive gas tankers by converting gas from its gaseous state into a liquid and then returning it to a gaseous state.
The two Russian projects will be implemented because of the European and Russian determination, which put their interests above all other considerations. They are being opposed because they pose a greater challenge to gas exporters. Other exporters do not have the pipelines to supply gas and are mainly dependent on expensive tanker transportation.
There is no doubt that tensions between countries, especially neighbouring ones, is the main reason for not having pipelines, without which they cannot compete in the future and will cause them to lose some of their end-user markets. This is so especially for Qatar and Iran.
The first can provide the rest of GCC countries and some Arab countries, such as Jordan, Syria and Lebanon, with gas, which can reach Turkey and from there to Europe. However, this requires improving its relations with neighbours.
As for Iran, due to its foreign adventures, which has caused tension in its surroundings, it cannot export gas by pipelines, although it has the ideal location between east and west. Iran needs to reform its relations with neighbours and adhere to peaceful and practical policies.
Until then, Russia will remain the world’s leading gas player, purely by chance.