Russian LNG cannot be excluded from global gas balance - Novatek head

ISTANBUL. Oct 30 (Interfax) - It is impossible to exclude Russian liquefied natural gas (LNG) from the global gas balance, the head of Novatek , Leonid Mikhelson, said during the Verona Eurasian Economic Forum.

"There is practically no one-hundred-percent linkage of LNG to consumption regions anymore. This market is global. So, the European Union included a refusal of Russian LNG in 2027 in its 19th sanctions package. Currently, Russia accounts for more than 10% of global LNG production. These volumes will simply go to other markets. Excluding Russia from the global gas balance - well, that's simply impossible. There would be an unprecedented price surge. And in that case, the European consumer would pay the most," Mikhelson said.

U.S. LNG projects will not be able to cover the intensively growing demand in the European region, he said. "Due to sharp demand in Europe, growth in consumption of about 4% is expected this year. Consumption there will increase by 20 million tonnes. And in the USA, by the way, export growth this year will be less - about 17 million tonnes by the end of the year. Therefore, if the EU continues to increase demand at the same rate, there is no guarantee that even new U.S. projects will be able to cover it," he said.

The active development of data centers in the U.S. will increase domestic consumption in the country and limit export capabilities, he said.

The contract structure on the market is changing. "Instead of long-term contracts, consumers are choosing flexible supply terms, almost like on the oil market. For example, the Europeans have almost entirely covered this year's volumes with spot contracts," he said.