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Russia considers natural gas expansion in North Africa, Near East

Russia sees potential for LNG expansion in the Middle East.
Russia's President Vladimir Putin (R) meets with Gazprom's Chief Executive Alexei Miller at the Novo-Ogaryovo residence outside Moscow, October 29, 2012. Russia's Gazprom pledged more than $38 billion (23.7 billion pounds) to develop an East Siberian gas field and build a pipeline to the Pacific port of Vladivostok to lessen its reliance on exports to Europe and develop Asian markets. REUTERS/Aleksey Nikolskyi/RIA Novosti/Pool (RUSSIA - Tags: POLITICS ENERGY BUSINESS) THIS IMAGE HAS BEEN SUPPLIED BY A THIRD

Russian media in recent days has begun to talk about Gazprom’s plans to increase sales of liquefied natural gas (LNG) to markets in North Africa and the Near East. On March 25, according to a Gazprom press release, a working meeting was attended by the chairman of the board, Alexey Miller, and the Kuwaiti ambassador to the Russian Federation, Abdulaziz al-Adwani. The two sides discussed the prospects for bilateral cooperation in the sphere of oil and gas. In particular, they discussed expanding cooperation within the framework of Gazprom’s supplying of LNG to Kuwait and implementing joint projects. Neither side made a statement as to specific joint projects, but the concept of supplying LNG from Russia to the Near East has evoked a certain resonance.

Notwithstanding the somewhat exotic nature of the route, such transactions make good market sense, and in a completely concrete way: the fact is, despite a very respectable reserve of natural gas in Kuwait (1.8 trillion cubic meters), in 2012, gas production in the country amounted to 15.5 billion cubic meters — clearly inadequate to cover rapidly growing demand (18.2 billion cubic meters in 2012). The deficit is filled primarily by imports of LNG via a floating regasification terminal. Initially, these imports were seasonal, to cover summer peak demand for electrical power for air conditioning. Most of this LNG was delivered on the basis of one-time, spot-market transactions. But now demand is growing and, by all appearances, in the coming years LNG will be needed not only in the summer, but all year round. To meet this need, Kuwait plans to build a major, stationary regasification terminal.

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