Russia’s plans for Arctic gas may be an alternate source for China’s energy needs, sate Chinese appetite for US energy products

Those Arctic gas plants in Russia somehow remind me of blockbuster in its attempt to move over into the online rental business competing with Netflix. When Blockbuster had its scheme up and running it bled money into the market as each subscriber cost them more than they made on it. They just hoped that one day they would pass the magical threshold for profitability. We know the rest of the story. Russian LNG can only exist because the Russian state subsidizes it with tax breaks, free infrastructure and sweet deals. What this means is that essentially Russia throws good money after a project that they hope will cross the threshold one day make them the money back. It’s a Casino and most Casino deals are a store of trouble to come. One day Russia is going to sick of throwing money after exports – they should be making money off them. What then?

The United States, the largest potential new supply of natural gas on earth, may have to contend with a formidable competitor in the Arctic Circle, after Russia’s second-biggest producer Novatek’s agreement last week to sell 20 per cent of its Yamal Peninsula project to Chinese state oil companies.

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