This analytical report is prepared by the Oxford Institute for Energy Studies. The objective of the paper is to define the most important factors shaping natural gas demand in Russia’s electricity and heat sectors, to analyze the extent of their impact, and to reach conclusions on long-term natural gas demand for electricity and heat production up to 2035.

Already grappling with a supply glut in liquefied natural gas (LNG), global gas companies face fresh challenges due to two seismic events: the COVID-19 pandemic and the global oil price shocks. Together, these developments are set to deepen and lengthen the current imbalance between supply and demand in LNG markets, leading to a lower-for-longer price environment. As a result, up to 8% of global LNG demand could be at risk (more than 25 million tonnes per annum, or MTPA) in the near term while the low-price environment could last another one to two years.

The work by Bain & Company stresses the ineffectiveness of the traditional approach to supply chain management in the current conditions. The experts describe new principles on which supply chains should now be based and suggest ways to improve the efficiency of existing supply chains amid the economic crisis triggered by the COVID-19 pandemic.