Page 10 - FSUOGM Week 48 2021

FSUOGM COMMENTARY FSUOGM

Chisinau effectively brought the crisis on itself big contributing factor to the current gas crisis
by stalling in contract talks with Gazprom. It – and that means prices are likely to stay elevated
was also Moldova that insisted that its supplies this season too.
should be priced more according to rates at gas EU gas storage is already depleting quickly
hubs. from historically low levels, with facilities only at
71% utilisation on November 24, according to Gas
What next? Infrastructure Europe, even though the continent
Certainly, gas buyers whose long-term contracts is less than two months into the heating season.
with Gazprom and other suppliers are near to There were hopes that Gazprom would provide
expiry are likely to go back to the greater use of extra gas to ease the supply crunch in Novem-
oil indexation, or indexation to other energy ber, but this influx of supply has not materialised
products such as other petroleum fuels and and the company’s own storage sites in Europe
perhaps even electricity. They are also likely to remain near to empty. While many have accused
seek longer-dated pricing systems that safeguard Gazprom of artificially squeezing European sup-
against this year’s volatility. plies as a way of pressuring German regulators
However, whether the crisis will result in to fast track approval of Nord Stream 2, as bne
diversification away from hub pricing in the IntelliNews reported the V-shaped gas market of
longer term is less clear. The EU has defended its the last two years means Gazprom is already work-
efforts to liberalise prices, and buyers are often ing at close to its maximum and has limited capac-
susceptible to short-termism. Once prices do fall, ity to increase exports to Europe at all.
they may once again revert back to hub pricing While Gazprom has been accused of inten-
for short-term benefit. tionally withholding some supply to jack up
A more immediate source of concern for buy- prices, its supplies to Europe and Turkey minus
ers is the upcoming winter. Supply has already former Soviet Union countries were up 8.3%
been put to the test by low levels of storage fol- year on year between January 1 and November
lowing the distortions created by the pandemic, a 15. Following cuts to its investment plans in 2020
sharper-than-expected economic recovery over in response to the pandemic, and given that the
the summer, and continued supply constraints. sharp rebound in gas demand in Europe largely
Meteorologists report that this November has took the market by surprise, the Russian supplier
already been the coldest for over five years – may not have the gas ready to avert more serious
even colder than the winter of 2021 that was a shortages in the coming months ™

PIPELINES & TRANSPORT

Arctic LNG-2 obtains €9.5bn in

external financing

RUSSIA THE Arctic LNG-2 project led by Russia’s Bank for International Cooperation (JBIC).
Novatek has secured €9.5bn ($11bn) in external Arctic LNG-2 did not disclose the identity of
The project's overall financing, meaning it now has all funding neces- any other of the individual lenders. But Reuters
cost is $23bn. sary to finish construction. reported previously that Italy’s SACE, Germany’s
Arctic LNG-2 will consist of three liquefac- Euler Hermes might contribute funds, among
tion trains on Russia’s Arctic Gydan peninsula others.
capable of producing almost 20mn tonnes per The rest of financing for the $22bn Arc-
year of LNG. Novatek and its partners took tic LNG-2 is due to be covered by the project’s
a final investment decision (FID) on Arctic shareholders. Novatek operates the scheme with
LNG-2 back in 2019, even though the neces- a 60% interest, while France’s TotalEnergies and
sary external financing at that time was not in Chinese companies CNOOC and CNPC each
place. have 10% and the remaining 10% is divided
In a statement, Arctic LNG-2 said it had between Japan’s Mitsui and JOGMEC.
obtained a 15-year facility from Russian and The Indian press reported recently that
international investors. Russian financiers Indian investors were also interested in having
including Gazprombank, VEB.RF and Bank an equity role in Arctic LNG-2, but no such deals
Otkritie are putting forward some €4.5bn, while have been announced. Novatek has said before
Chinese lenders including the China Devel- it does not want to cede majority control of the
opment Bank and the Export-Import Bank of project, meaning there may be up to a 10% stake
China have committed to provide €2.5bn. A up for grabs.
further €2.5bn is due to come from institutions Arctic LNG’s three trains are due on stream in
from OECD member countries including Japan 2023, 2024 and 2026. ™

P10 www. NEWSBASE .com Week 48 01•December•2021