Page 111 - RusRPTMar21

financing to the project than originally expected, Kommersant reports. Wintershall Dea reported that it had finished the financing of the project, having provided EUR 730mn, instead of EUR 950mn expected initially. And as of the end of 2020, Uniper and OMV also said that they had fulfilled their financing obligations and reported some EUR 700mn provided to the project. Shell announced that it had completed the financing of the project back in 2Q20, although it did not disclose the amount. Neither these companies, nor Gazprom or Nord Stream 2, have provided an explanation as to why the amount of financing differs from the initially guided EUR 950mn per European partner. Among the explanations is that the final cost of the asset came below the EUR 9.5bn budget, or that Gazprom will have to finance more than 50% of the project with equity, according to the paper. Nord Stream 2 has stated that the project is fully financed.
Last year the US announced that it would expand the Countering America's Adversaries Through Sanctions Act of 2017 (CAATSA) to Nord Stream 2. This law allows the US to sanction entities and individuals which invest USD 1mn at once, or USD 5mn over a year, into the project. Another potential hurdle to the debt financing of the project might come from the decision of the Polish regulator back in October 2020 to fine Gazprom and European partners, and to order them to terminate the financing agreements.
Europe’s weather is warming to late-spring levels from deep cold in February. Meanwhile, Russia remains locked in a cold winter. This has led to lower prices for European gas and a decrease in Russian gas transit through Ukraine.
European prices are falling from high levels even as Russian gas is being held back to meet domestic demand. As a result of the combination of warm weather in Europe and cold weather in Russia, two things have happened.
First, European gas prices have fallen, to c$200/mcm ($5.7/mcf) from January’s average c$260/mcm ($7.4/mcf). Second, the transit of Russian gas through Ukraine has fallen to c70mmcm/d in recent days from an average of c120mmcm/d in the first half of February.
“The European gas market is normalizing, but Gazprom’s position still much-improved,” BCS Global Markets said in a note. “This brings to a close a very strong run of European gas prices since mid-December, as cold weather in first Asia, then Europe tightened global gas markets, rapidly depleted European storage, and drove up European gas prices. Regardless of the quick warm-up in Europe, the European gas market is in much better shape than it was just three months ago, mostly due to a swift drawdown of gas storage from overly full to below average, and a full 27bcm below that seen this time last year.”
Gazprom’s outlook for the key European gas market in 2021 has
111 RUSSIA Country Report March 2021 www.intellinews.com