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Russian Federation–East Asia Liquefied Natural Gas Trade Patterns and Regional Energy Security

Publication | June 2019
Russian Federation–East Asia Liquefied Natural Gas Trade Patterns and Regional Energy Security

Importing liquefied natural gas can improve energy security in the People's Republic of China, Japan, and the Republic of Korea.

East Asia has remained the biggest market for liquefied natural gas (LNG) in 2018. The Russian Federation has a clear vision to develop its East Asia LNG projects to provide a bigger share of Asian LNG imports. We model Russian Federation–East Asia LNG trade patterns via the gravity trade theory, which is shown to fit well with energy trade patterns. Our findings reveal that a 1% increase in population growth in the People’s Republic of China, Japan, and the Republic of Korea increases Russian Federation LNG exports by nearly 3.43%, and economic growth by 6.16%, while any increase in geographic distance decelerates LNG exports to the selected East Asian economies by nearly 7.3%. This means that the close proximity of the Russian Federation to East Asia is an advantage for its LNG exports. Furthermore, the West’s sanctions against the Russian Federation are a positive influencing factor on the latter’s LNG export volume to East Asia. We recommend some policies such as construction of a gas trading hub in Asia, increasing regional pricing power, and energy import diversification and shorter distances between the Russian Federation (exporter) and East Asia (importer) to improve energy security in this region.

WORKING PAPER NO: 965