Page 6 - NorthAmOil Week 20

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Gazprom suffered a setback last week when German regulators denied its Nord Stream 2 project a waiver from EU energy rules.
downs over the past decade, but current con- ditions could spark a wave of closures without ample state support.
Fuel demand in Italy, one of the hardest hit by the pandemic, plunged 45% year on year in April, according to new data, with a 35% decline expected in May. The country was the first in Europe to impose a nationwide lockdown in early March, but restrictions are now being grad- ually eased.
Italian refiners have responded by cutting runs, with Eni maintaining its plants at only 60% of capacity.
Elsewhere, Scotland-based refiner Ineos is reportedly seeking an emergency loan from the UK government for its joint venture with PetroChina. It may turn out to be a contentious issue in the public’s eye, as Ineos’ owner Sir Jim Ratcliffe is one of several UK billionaires to seek state support, despite having moved overseas for tax purposes.
Greece’s Hellenic Petroleum has bucked the trend, reporting a slight increase in core earnings for the first quarter. Rather than cutting runs, it boosted production in the quarter and sold more products overseas.
In Norway, state-owned Equinor has taken a final investment decision (FID) on a landmark project to capture, transport and store carbon in the North Sea. Pending approval from Norwe- gian authorities, Equinor and its partners Royal Dutch Shell and France’s Total are set to invest $670mn in the scheme’s first phase.
If you’d like to read more about the key events shaping Europe’s oil and gas sector then please click here for NewsBase’s EurOil Monitor.
FSU losses
Russian oil producers enjoy a cost edge over many of their international peers, but they too have seen earnings slump on the back of weaker prices and a collapse in demand.
State oil giant Rosneft swung to a net loss in the three-month period, as low prices caused it to book hefty write-downs and the devaluation of the Russian ruble inflated its foreign-denom- inated debts. Rosneft’s core earnings also plum- meted, even though its margins remain the envy of many of its foreign competitors.
Russia’s largest independent gas producer Novatek also posted a net loss and weaker core earnings in late April, and we are likely to see a similar picture with most of the country’s pro- ducers. The case was the same following the 2014 oil price crash.
The second quarter is set to be more gruel- ling for Rosneft, with oil prices showing limited recovery and OPEC+ production cuts coming into force.
Meanwhile national gas company Gazprom suffered a major setback last week when German regulators denied its Nord Stream 2 gas pipeline a waiver from EU energy rules. This will require Gazprom to ensure third-party access to the pipeline and potentially cede majority control of it. Under Russian law, Gazprom has exclu- sive rights to export Russian gas via pipeline and Moscow is unlikely to end this monopoly, through fear of creating competition between domestic suppliers. As such, the company will likely have to get creative in complying with EU legislation.
Belarus has been importing US and Saudi oil over the past month, as its spat with top supplier
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w w w . N E W S B A S E . c o m Week 20 21•May•2020