Analyst Explains Why US Giving Green Light to Second Batch of Russian LNG

When a tanker carrying the first batch of Russian liquefied natural gas (LNG) arrived at the US city of Boston, observers just shrugged their shoulders; however, when the news emerged that the second one is going to head for the US eastern coast, many were caught by surprise.

According to RIA Novosti contributor Dmitry Lekukh, "that's a different story."

"If the Russian LNG is able to compete with American 'shale' [gas] on the US market, then try to guess what it will do with [America's hydrocarbons] in Europe, which is much closer [to Russia]," the contributor suggested.

Tanker Carrying 1st Batch of Russian LNG Arrives in Boston

29 January 2018, 01:18 GMT

Commenting on the first delivery of Russia's LNG to the US, Alexander Novak, the head of the Russian Energy Ministry, the "gas was no longer Russian" as it was purchased by French Engie from Malaysia's state oil and gas company Petroliam Nasional Berhad (Petronas).

However, it does not seem to be a problem, according to Lekukh, the Russian liquefied gas has a good chance of winning over its competitors.

He noted that the world market of LNG, which the Russian Federation has entered after kicking off its Yamal project, is regulated differently than that of oil and does not have a "political component." The RIA Novosti contributor believes that Novatek's LNG may change the situation on the global gas market in a cardinal way.

Lekukh suggested that US businessmen are well aware of this potential trend. However, their ultimate goal is the globalization of gas markets, he pointed out.

"This globalization will inevitably lead to the increase in energy costs in Europe: [LNG] 'spots' are more expensive than traditional 'pipeline' contracts. Moreover, their price can be artificially regulated in the short-term through stock mechanisms," the journalist explained.

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24 January 2018, 02:18 GMT

That means that, first, the US shale gas will undoubtedly occupy its niche in the global market; and, second, it's likely that the US will manage to "knock out" its main competitors, namely the Europeans, from the global energy market due to "tax reforms," relatively cheaper labor and less socially-oriented economy, Lekukh assumed.

According to the journalist, it fully corresponds to the Trump strategy announced at the recent Davos forum, which read between the lines that Trump is going to "fight" and "negotiate" with China and Russia, at the same time expelling the Europeans from their traditional market positions.

"And it is not a coincidence that both [German Chancellor Angela] Merkel and [French President Emmanuel] Macron demonstratively left the forum before the speech of the American president," Lekukh remarked. "They already knew how he was going to do business with them and what will happen to their businessmen."

Putin: No Need to Be Afraid to Talk About Tankers With Russian LNG for US

1 February 2018, 09:13 GMT

Trump's message is clear, the journalist noted, if you want to prosper, transfer your money and your production facilities to America.

The Russian Arctic-based Yamal LNG is focused on natural gas production, liquefaction, and shipping of hydrocarbons. The joint project brought together Russia's Novatek, France's Total, China National Petroleum Corporation, and the Silk Road Fund.

Addressing the representatives of the Franco-Russian Chamber of Commerce and Industry on Thursday, Russian President Vladimir Putin highlighted the issue of the shipments of Russian gas to the United States.

The second tanker with liquefied natural gas from Russia is due to reach the American shores on February 15.

The views and opinions expressed by Dmitry Lekukh are those of the analyst and do not necessarily reflect those of Sputnik.