To make it clear, in 2020 Russia produced 4.5 million m3 (mcm) of helium, much less than the U.S. (74 mcm, incl. helium from the Cliffside storage) and Qatar (45 mcm).
A window of opportunity Gazprom made the final investment decision on the Amur GPP project in October 2012, also approving an investment plan for the Chayandinskoye field, which later supplied the Power of Siberia pipeline with natural gas.
A year later, the US Congress passed the Helium Stewardship Act (2013) that limited withdrawals from the Cliffside helium storage facility.
In 2012, 60 mcm of helium were taken from this storage, while in 2020 this figure did not exceed 13 mcm, according to the US Geological Survey.
As a result, over the same period, the U.S. reduced its helium supply by more than 40% (from 133 million to 74 mcm), which could not but create opportunities for other supplying countries, whose global share has increased from 24% in 2012 to 47% in 2020.
Qatar, for example, has more than tripled its helium production between 2012 (13 mcm) and 2020 (45 mcm).
However, this did not prevent the risk of a global shortage, as evidenced by rising prices.
- increased by 21%, from $3.5 to $4.2 per m3
- while in November 2020 it exceeded $4.9 per m3.
- in 2020, the total supply of helium from the U.S. to Japan, China and South Korea exceeded the 2017 level by 40% (43.4 million m3 versus 31.0 million m3).
the aerospace industry, which accounted for 9% of global helium demand on the eve of the pandemic
versus 26% for healthcare
14% for electronics
51% for all other sectors
Between 2016 and 2019, global helium demand within this sector grew by 9%, while by 2024 it will increase by another 21%.
The same goes for electronics, where helium is used to cool smartphones.
Between 2016 and 2020, the global number of smartphone users grew by 2/3, from 3.7 billion to 6.1 billion.
This growth is unlikely to stop, given that by 2024 the number of mobile devices (incl. tablets and IoT devices) will increase from to 14 billion to 17.7 billion.
- by 2024 it will increase by 21% compared to 2019 levels
For Blue Star Helium (Australia), it grew 9 times (up to $32.9 million) and for RHC Helium (Canada) – 86 times (up to $60.5 million).
A timeline for new projects
For the same reason, the Amur GPP will not be the only new helium production site in Russia.
To date, the only Russian site is the Orenburg Helium Plant, which has cut production from 5.1 mcm to 4.5 mcm between 2017 and 2020.
In Yakutia, with the support of the Far East Development Corporation, a helium storage facility with a capacity of 40 mcm will be built by 2030.
It will be filled with helium from the Otradninskoye and Srednebotubinskoye fields, whose operators may undertake a 2-stage helium project.
At the 1st stage, helium capacities with an annual volume of 0.3 to 1.2 mcm will be built, and at the 2nd stage their volume will be increased to 8-12 mcm.
In turn, regulatory bodies, following the needs of key market players, are going to include obligations to extract helium reserves in licenses for gas fields (to avoid the annual loss of up to 15 mcm of helium), as well as to establish both the state and commercial reserves of helium concentrate (to meet the long-term needs of helium-consuming industries and to hedge export risks).
This will help Russian producers increase the annual helium capacity to more than 80 mcm – to a level, that is excessive for the Russian market, given that annual domestic demand has never exceeded 4.8 mcm, and in 2020 it amounted to 4 mcm.
That is why new Russian helium projects will be export-oriented.
More than a timely decision
And this is good news for the global market, given the already mentioned risk of a global shortage.
In fact, Russian producers will enter the niche formed following the reduction in the US supply.
Between 2012 and 2020, the latter fell by 59 mcm, which is almost equivalent to the helium capacity of the Amur GPP.
Therefore, the growth of Russian exports will not result in either a price collapse or a surplus on the world market.
On the contrary, Russia will become the savior of the global market, able to meet the needs of European and Asian consumers thanks to its dispersed production facilities and the associated logistic benefits.
Linde has already taken advantage: in 2018, the German industrial gas producer signed a contract to purchase helium from the Amur GPP, having previously become its licensor.
Hopefully, other key market players will follow this path.