The Week in Review (September 14 – 21)

The Monitoring Team: Lina Nagell, Henrik Vorloeper


Gazprom on Top of the News in European Gas Markets

Gazprom’s European export estimate (including Turkey) has increased to 158 bcm, compared to earlier predictions of 152-155 bcm made for this year. Exports totalled 159.4 in 2014. The price for the winter season is expected to be at 6.2 USD/mmbtu. The average price includes contracted prices as well as prices of the spot market.

These volumes already include sales at first-ever auctions held by Gazprom Export. The aim is to sell 10% of its gas volumes destined for the EU via auctions by 2017-18, and thus maintain European export volumes without the need to attract long-term contracts or oil-indexation. According to Platts, 48 lots were sold in total: 37 of them were awarded at Greifswald NEL, 10 at the Olbernhau II delivery point, and only one at Greifswald OPAL.

On the southern front, the construction of the Turkish Stream pipeline experiences likely delays and doubts on its future, because of “political uncertainties” in Turkey, according to Gazprom. Talks have been frozen for now. The construction of the pipeline was announced last year at the same day as the long expected South Stream pipeline has been cancelled.

Nadia Rodova, 2015. Gazprom Raises Estimate of Europe-Bound Gas Exports to 158 Bcm. Platts, 14 September 2015.

Lucie Roux, 2015. Russia’s Gazprom edges towards flexible gas market-driven auctions. Platts, 16 September 2015.

Gazprom Confirms Turkish Stream’s Delays, Blames Ankara’s Political Instability. Natural Gas Europe, 14 September 2015.


Ukraine Expects a New Gas Deal with Russia.

The Ukrainian energy ministry announced it would soon reach a gas deal with Russia to secure deliveries for the winter months. The agreement will come in trilateral talks between Russia, Ukraine and the European Commission. The expected price is 6.16 USD/mmbtu, which is close to the European average price. The Ukrainian Minister of Energy anticipated a higher price, so that the lower price would be seen positively by the consumers, according to him. Ukrainian-Russian gas relations have been subject to permanent disputes over pricing issues over the last decade. Ukraine is still a key transit route for Russian gas supplies to Europe.

Pavel Polityuk and Alessandra Prentice, 2015. Ukraine Expects New Gas Deal With Russia by End of Next Week, The Moscow Times, 15 September 2015.


Poland’s First LNG Terminal to Be Ready for Commercial Use in May 2016

The LNG terminal at Swinoujscie (Poland) is likely to reach full capacity in 2018. The terminal was scheduled to open in 2014, but has been delayed several times. Jan Chadam, head of state-owned Polskie LNG, which will operate the terminal, said he is confident of securing more supply contracts to push the terminal to close to its full capacity of 5 billion cubic metres by 2018. The project is part of Poland’s attempt to diversify gas imports and to decrease dependence on Russia. It will also help to reduce dependence of other Central European countries. A proposed pipeline to Lithuania will link Poland with the Baltic States. The Czech Republic, Slovakia and Hungary have also made strides in recent years to connect their systems and find new sources of supply to ease their heavy reliance on Russian gas. However, the terminal operator still lacks potential suppliers. So far, there is only one supply contract – with Qatargas. According to Chadam, partners in the U.S and Canada have shown significant interest.

Agnieszka Barteczko and Anna Koper, 2015. Poland’s LNG terminal likely to hit full capacity by 2018 –operator. Reuters, 16 September 2015.


Turkmenistan Intends to Start Construction of TAPI

The gas pipeline project, connecting Turkmenistan’s gas fields with Afghanistan, Pakistan and India, has been planned since 1990, but delayed mostly because of political instability in Afghanistan. The pipeline allows Turkmenistan reach new customers for its gas, since Russian demand on Turkmen gas has declined considerably in recent years and the only significant customer currently is China. The amount of costs reportedly are at USD 10 billion, which will be supported by the United States and the Asian Development Bank. The annual capacity of the pipeline is set to be 33 bcm.

Marat Gurt, 2015. Turkmenistan to start work on TAPI pipeline in December. Reuters, 15 September 2015.


Energy Sanctions and Russia: What Comes Next?

The study investigates the impact of sanctions on Russia on its energy sector. From the first sight, sanctions appear to have a limited impact, as neither oil nor gas exports suffered. However, the sanctions’ long-term implications may prove more important. Punitive measures against the Russian oil sector have come at a time when the industry was facing growing urgency for collaboration with international partners. Developing a new generation of Russian oil fields hinges on these partnerships to a much greater extent than in the recent past. For the Russian gas sector, on the other hand, the main challenge appears to be a lack of markets. Sanctions could further magnify this challenge by hampering Russia’s liquefied natural gas growth plans and fostering the EU’s drive to diversify its gas imports.

Adnan Vatansever, 2015. Energy Sanctions and Russia: What Comes Next?, 10 September 2015.


Drop in Russia’s Oil Extraction Possible If Prices Fall Beyond USD 40 per barrel

Russian Deputy Energy Minister Alexei Teksler said that it is possible that Russia reduces its extraction of oil if prices fall below USD 40 per barrel.

Sputnik News, 18 September 2015. Drop in Russia’s Oil Extraction Possible If Prices Fall Beyond $40/Bbl.


E.ON Makes Case for TPA Exemption for OPAL Extension

European companies that recently signed the Shareholders’ Agreement on the implementation of the Nord Stream II with Gazprom, argue that the project connecting Russia with Germany is good news for European energy security. These companies’ strategy hinges on two main pillars: 1. asking politicians and the public to acknowledge the role of natural gas in the energy mix, especially in light of the looming Paris climate negotiations in December, 2. trying to convince with the notion that strong ties with Russia implies energy security, arguing that the Nord Stream II project would decrease risks connected to gas transit countries. Despite the clear opposition of the European Commission, Gazprom’s five partners in the Nord Stream II project remain united. Against this backdrop, on Thursday, E.ON made the case for third-party access (TPA) exemption for OPAL extension.

Sergio Matalucci, 2015. E.ON Makes Case for TPA Exemption for OPAL Extension, Natural Gas Europe, 18 September 2015.


China Announces to Double Imports from Russia via ESPO Pipeline by October 2017

China wants to double its pipeline imports of Russian ESPO crude to 30 million mt/year as early as October 2017, after the second Mohe-Daqing pipeline comes on stream. The pipeline was built to take 15 million mt/year of ESPO crude from Rosneft for 20 years. As part of earlier deals, Russia’s state-owned Rosneft agreed to increase ESPO deliveries to China National Petroleum Corp. by five million mt/year in 2015 and another five million mt/year in 2016. So far this year the delivered volume has only increased slightly. PetroChina has taken a total of around 11.02 million mt from the existing pipeline over January-August, or an average 33,105 b/d, with the yearly volume for 2015 expected to hit 16.48 million mt at the current transmission rate. While well below the 20 million mt/year target, this would be up 5.7% from 15.6 million mt shipped in 2014.

Meghan Gordon, 2015. China to Double Russia ESPO Pipeline Imports to 30 mt/year in Oct 2017, Oil and Gas Eurasia, 18 September 2015.



One comment

  1. Thknas for taking the time to post. It’s lifted the level of debate


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