Page 8 - Euroil Week 32 2021

EurOil PIPELINES & TRANSPORT EurOil
Markets concerned by Gazprom’s processing plant fire
A processing plant of Russia's natural gas giant Gazprom in the Yamal-Nenetsk region in West Siberia was hit by fire, which halted the supplies to Yamal-Europe pipeline, according to a report by Interfax.
As reported by NewsBase, Gazprom exported record volumes of gas to Europe during the first half of the year, despite recent claims in the press that the company has been withholding supply to jack up prices.
"Markets are justifiably nervous," BCS Global Markets wrote on August 6, given the very tight nature of the European gas market. With record- high spot and futures prices and storage facilities at historically low levels, even modest interrup- tions in supplies are likely to move gas prices, the analysts remind.
However, BCS GM expects Gazprom to prioritise the restoration of exports as quickly as possible, while affirming a Buy rating on the company's shares.
"The reporting, pictures and videos coming out of West Siberia seem to indicate that one line of the 3-line Urengoi Gas Condensate Process- ing plant will be out of action for an extended period of time," BCS GM commented, believing that one of the larger lines is down and "appears to be a near total loss".
RUSSIA
Gazprom is expected to prioritise the restoration of exports as quickly as possible.
5.5mn and 1.2mn tonnes per year (tpy) of con- densate, and in total process 42bn cubic metres per year of wet natural gas.
The loss of a larger line would reduce conden- sate production for 2021 by about 2.2mn tonnes and gas by about 8 bcm, which is relatively small in relation to Gazprom’s European exports of 190 bcm and overall production of 500 bcm. In addition, the loss of gas output could be par- tially managed by putting unprocessed "rich" gas directly into the pipelines.
The loss of the condensate is more signifi- cant for Gazprom, potentially reducing overall liquids production by 4% for 2021, which could decrease 2021 estimated EBITDA by about 2% versus BCS GM base-case scenario. If the line is out indefinitely, the EBITDA effect could be 5%-7%, BCS GM estimates.
VTB Capital (VTBC) analysts commented to RBC business portal that should the Yamal-Eu- rope pipeline remain at half its capacity until end-August, Gazprom could lose 0.5% of 2021 EBITDA, which could be received negatively by investors.
"Although this is generally not a big number, we think that the situation might still be
perceived negatively, as it might raise ques- tions on the reliability of Gazprom’s gas
supplies," VTBC wrote.™
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The three lines have capacities of 5.5mn,
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