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3 September 2021

Part of the Sun on Earth: Russian helium will fill the deficit in the world market

Dr. Fares Kilzie,
Chairman of the Board of the CREON Group

Source: Rossiyskaya Gazeta, 03.09.2021

Anastasia Pavlova

Research and Markets predicts that the global helium market will reach $ 18.2 billion by 2025, averagely increasing by 13 percent.

At the same time, according to analysts, the demand for helium in the next three years may grow by more than 20 percent due to the pandemic and the explosive demand for MRI. New helium projects will allow Russia to occupy the US niche in the global market: over the past nine years, the supply of US gas has decreased by more than 40 percent.

In the space industry, helium demand will be fueled by the launch of a Chinese orbital station, SpaceX’s ambitious plans and space tourism. From 2016 to 2019, global helium demand in this sector grew by 9 percent, and by 2024, according to CREON Group estimates, will grow by another 21.

Another consumer of helium is electronics. Gas is used for cooling in the manufacture of screens for gadgets. From 2016 to 2020, the number of smartphone users worldwide grew from 3.7 billion to 6.1 billion. And by 2024, the number of mobile devices in the world will reach 17.7 billion.

The world production of helium, according to various estimates, is about 160 million cubic meters. In the global market, the US (56 percent) and Qatar (28 percent) are leading. The share of Russia is still only 3 percent. But the situation is changing rapidly. In 2013, the U.S. Congress passed a helium management law and limited its removal from the Cliffside storage facility.

Historically, helium was a by-product of natural gas production

During the past nine years, the supply of helium in the U.S. has decreased by more than 40 percent, from 133 to 74 million cubic meters. This opened up opportunities for other supplying countries. “By stopping the sale of its reserves by 2023, the U.S. will reduce its presence in the world market, at least until the development of new deposits begins in the country. Today, the U.S. and Canada are considering the possibility of producing” green “helium from non-hydrocarbon sources, which is unlikely to exceed 10 percent of global production on the horizon until 2025,” says Fares Kilzie, chairman of the board of the investment group CREON.

In June, Gazprom launched the first production line at the Amur Gas Processing Plant. Upon reaching full capacity, the facility will become one of the world’s largest natural gas processing facilities and the largest helium production facility. By 2025, the plant will annually process 42 billion cubic meters of natural gas and produce about 60 million cubic meters of helium.

“Everything changes with the start of the development of gas fields in Eastern Siberia, the gas of which contains from 0.15 to 1 percent of helium. The efficiency of extracting helium depends on its content in natural gas. The GPP is getting the opportunity to receive large volumes of helium, which is actually a by-product of natural gas processing,” says Aleksey Kalachev, analyst at FG FINAM.

The Amur GPP will not be the only new helium production site in Russia. A gas chemical cluster is being shaped in the Irkutsk region, where solar gas production is also planned. Already in 2022, the Irkutsk Oil Company intends to launch the first helium plant at the Yarakta field, and the second plant by 2025. The launch of the second enterprise will make it possible to produce about 15-17 million liters of helium per year. Irkutsk Oil Company will become the second largest helium producer in Russia.

“New helium projects in Russia are great news for the world market, given the risk of a global shortage. In fact, Russian producers will occupy the niche formed after the supply decline in the US. Russian domestic demand for helium did not exceed 4.8 million cubic meters per year. In 2020, it amounted to 4 million cubic meters. Therefore, new domestic helium projects will be export-oriented,” says Fares Kilzie.

According to the expert, Russia will become a full-fledged participant in the global market and will be able to meet the needs of European and Asian consumers thanks to its dispersed production facilities and associated logistics advantages. The expert added that the regulators are planning steps that meet the interests of key players in the helium market.

Helium release obligations will be added to natural gas production licenses. This will allow avoiding annual losses of up to 15 million cubic meters of gas. Russia plans to build up government and commercial stocks of helium concentrate to cover long-term demand.

In the meantime

The demand for helium is growing worldwide, mainly due to the explosive growth in the demand for magnetic resonance imaging due to the pandemic. “Sales of MRI equipment from 2016 to 2019 in Japan, China and South Korea grew by almost a quarter and, according to experts, have not yet reached the limit. Helium also began to be used in the production and storage of vaccines against COVID-19,” says Olga Beloglazova, Head of the Energy Center, EY, Central, Eastern, Southeastern Europe and Central Asia.

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