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Gazprom projects it will only send 5 bcm of gas lower demand globally amid the coronavirus
to Russia’s eastern neighbour this year via the (COVID-19) pandemic, and the outlook for the
Power of Siberia pipeline, brought on stream in coming months remains bearish.
December. That network is not expected to reach This week, Australia’s government esti-
its full 38 bcm per year capacity until 2025. mated that the country’s export earnings from
Nevertheless, Gazprom CEO Alexei Miller LNG would drop by 26% year on year (y/y) to
says the 130 bcm per year target can be reached AUD35bn ($24bn), in the coming financial year,
by expanding Power of Siberia’s flow capacity by which runs July 2020-June 2021.
a further 6 bcm, building a second pipeline with Meanwhile, the US Energy Information
a capacity of 50 bcm per year through Mongo- Administration (EIA) reported last week that
lia and delivering additional supplies via the Far US LNG exports had declined by more than half
East. Miller did not disclose a timeframe for real- in 2020 so far. Citing data from consultancy IHS
ising these projects. The pipeline through Mon- Markit, the EIA said gas deliveries to US lique-
golia, known as Power of Siberia 2, enjoys strong faction terminals had reached a record high of
political support from Moscow. But it is still 9.8bn cubic feet (278mn cubic metres) per day
at the study phase, and it could be many years in March, but fell to less than 4.0 bcf (113 mcm)
before Russia and China agree a supply contract per day in June.
to underpin its construction, if ever. Meanwhile, more than 70 cargoes are esti-
Uzbekistan is making progress on several mated to have been cancelled for loading from
fronts in its energy sector. It has struck a prelim- US LNG plants in June and July, and the latest
inary deal with a group of Russian investors for media reports suggest that 40-45 cargoes may
the construction of a 1.5-GW gas-fired power have been cancelled for loading in August.
plant that would supply both domestic and However, some trade sources cited by Reuters
Afghan electricity users. It has also launched a last week have suggested that loading a cargo in
$300mn modernisation programme at one of its August might make more sense compared with
two main refineries, aimed at bringing the qual- June and July. This is because there is a price
ity of the plant’s fuel to Europe standards. contango between August and forward months,
while shipping rates are low.
If you’d like to read more about the key events shaping In the short term, the gas price differentials
the former Soviet Union’s oil and gas sector then between Europe and the US are expected to
please click here for NewsBase’s FSU Monitor . remain unfavourable for US producers. And the
Australian government also anticipated LNG
COVID-19 weighs on LNG exports spot prices to weaken further, with this having a
LNG exports are slumping as a result of negative impact on the country’s exports.

Week 25 25•June•2020 www. NEWSBASE .com P9