Page 82 - RusRPTAug19

Novatek’s consolidated gas production (including its share in joint ventures) increased 15% y/y, thanks to the contribution from Yamal LNG (+230% y/y) and higher production at Arcticgas (+1.5% y/y).
Natural gas prices in Europe are now at 10-year lows– a poor indicator given that the financial crisis was in full swing in 2009. That comes as carbon prices within the EU emissions trading scheme hit record highs as regulations tighten. The coming downturn is likely to encourage a new wave of efficiency gains via investments aimed at reducing costs when prices rebound on stronger post-recession demand. This collectively means that states in Europe have more leeway to take a harder negotiating stance, with or without pressure from the United States.
Russian oil companies would need up to RUB2.6 trillion ($41bn) in tax breaks to develop the Arctic region, Vedomosti reported on in July citing a letter from the head of Rosneft Igor Sechin addressed to President Vladimir Putin and backed by KPMG calculations. According to the business newspaper, discussions are ongoing as to whether Russia’s largest companies will be able to maintain stable long-term oil output with Siberian brownfields alone, without tapping into challenging Arctic offshore fields. This comes after Western sanctions have limited exports of extraction technology and complicated joint ventures with foreign energy majors. About 60% of all Russian energy resources are concentrated in the Arctic regions, Energy Minister Alexander Novak estimated in 2017. In 2018, Rosneft announced that it discovered more oilfields in the eastern Arctic region.
The Nord Stream 2 AG subsidiary of Russia's natural gas giant Gazprom appealed to the European Court of Justice over the recently passed amendments to the European Union's Gas directive, according to the July 25 statement. The argument is that the directive represents an "obvious discrimination" against the Nord Stream 2 pipeline, which infringes on the "EU law principles of equal treatment and proportionality". As reported by bne IntelliNews, in April the EU Council extended the Gas Directive of the Third Energy Package to non-EU pipelines and maritime pipelines – particularly those outside of the EU territory – which would force Gazprom to “unbundle” or hand over operation of the line to a company independent of Russia’s state gas produce
Ukraine's state-owned gas company Naftogaz has filed a suit with the Hague Permanent Court of Arbitration (PCA) demanding Russian pay the Ukrainian company $5.2bn in compensation for assets its lost following Russia’s annexation of the Crimea in 2014, the company said in a statement on July 31. “Naftogaz Ukrainy and the companies that comprise the Naftogaz group filed a suit to the tribunal of the Permanent Court of Arbitration in the Hague at the end of June containing claims for compensation of losses from expropriation of Naftogaz group’s assets in Crimea. The Naftogaz group asks the court to oblige the Russian Federation to pay $5.2bn to the plaintiffs,” the statement read. Naftogaz said it expected the PCA to make a decision on the case not earlier than by the end of 2020. Amongst the assets Naftogaz lost were the Crimean natural gas company Chernomorneftegaz, which was nationalized in March 2014 when Crimea joined Russia.
Russia and Saudi Arabia agreed to prolong the Opec+ global oil output cut, under which 25 oil producing countries cut the extraction by 1.2mn barrels as compared to October 2018, Russia's president Vladimir Putin said in Osaka
82 RUSSIA Country Report August 2019 www.intellinews.com