Leonid Mikhelson, the executive chairman of Russia's largest independent gas producer Novatek, has delivered a stark warning to the global liquefied natural gas industry and its players.

Speaking in an address to the LNG Producer Consumer Conference, Mikhelson predicted a sharp decline in demand for LNG if gas prices remain at current record high levels, and warned that investment capital available to gas developments could dwindle.

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The Novatek boss also warned that growing demand for energy in emerging economies could be met increasingly by the cheapest fossil fuels – predominantly coal - with devastating environmental impacts.

High gas prices may also stifle economic growth, as well as undermining environmental goals, Mikhelson said.

The global LNG industry has already seen financing options narrowing for LNG - as with all fossil fuels - despite the long-running argument that natural gas has an important role to play as a cleaner transitional fuel along the road to a decarbonised global economy.

"This attitude has to be reversed otherwise current situation will only get worse", Mikhelson said.

Competition from cheaper fuels could restrict LNG to a handful of production clusters with the lowest production costs, such as Iran and Qatar, said Mikhelson, who also included Russia's Yamal and Gydan Peninsulas in the list of ultra-competitive clusters.

And yet....

Despite the market turmoil this year, Novatek still expects to be able to supply close to 70 million tonnes of LNG per year to international markets in 2030, compared with the 18 million tonnes expected to be delivered from the company’s flagship Yamal LNG project this year.

With Russian authorities promising to make new nuclear ice-breaking vessels available to the company, it expects to deliver LNG cargoes from Yamal and Gydan to Asia and Pacific all year round, along the so called eastern route via Russian Arctic Seas from 2024.

But Novatek is taking the goal of reducing greenhouse gas emissions seriously, Mikhelson insisted.

The company and its international partners are pushing carbon capture and storage solutions at LNG projects on the Yamal and Gydan Peninsula as the most promising technology to reduce emissions at existing industrial installations.

According to Novatek’s estimates, existing underground reservoirs under the Novatek’s control may provide annual storage capacity of at 50 million tonnes of carbon dioxide.

“Our customers will be able to see details of [Scope 1 & 2] emissions” for LNG that they buy, to enable full accounting from their side, Mikhelson said.