Page 127 - RusRPTJul21

9.2 Major corporate news 9.2.1 Oil & gas corporate news
The joint venture of Gazprom and Wintershall Dea, Gascade, jointly with Ontras (VNG), is to construct infrastructure for transporting hydrogen in Germany, Interfax reports.
This infrastructure is to serve as the hub for producing climate-neutral hydrogen that is planned for launch in 2026. Around two thirds of the new infrastructure is to be converted from existing pipelines for transporting natural gas.
Gascade, together with RWE, Gasunie and Shell, might undertake a project to construct a hydrogen pipeline (up to 1mnt/a after 2035) that would connect a green hydrogen production site (powered by wind electricity) in the North Sea to the German shore.
We think that the so-called blue hydrogen might present a way in which Gazprom can continue to monetise its gas resources, even if its export markets (e.g. Germany) transition from hydrocarbons to hydrogen as an alternative fuel. Given its existing pipeline infrastructure and gas reserves, Gazprom has the potential, in our view, to play a leading role on the developing hydrogen market.
● Gazprom
Gazprom reported its non-FSU export and production figures for 1H21 1 July, Interfax reported. Non-FSU exports were up 26% y/y to 99.9bcm, and production was up 18% y/y to 261bcm. Production for 2Q21 was up 29.3% y/y to 38.3bcm, on our calculations, while non-FSU exports should be up around 21% y/y to 47.4bcm, on our calculations. Gazprom also reported exports to select countries in Europe. Notably, 1H21 exports to Turkey were up 209% y/y and exports to Germany were up 43% y/y. On an unrelated note, Bloomberg reported yesterday that the US House Appropriations Committee had voted to move forward with the fiscal 2022 State and Foreign Operations bill, which includes a provision that would bar the president from waiving sanctions on Nord Stream 2. The amendment was proposed by Democrat Marcy Kaptur. Gazprom’s non-FSU exports were near the company’s record of 101.2bcm set in 2018. At that time, the non-FSU export price, as reported by the company, averaged $235/mcm, while the TTF Day Ahead price averaged $267/mcm and Brent averaged $71.2/bbl. For 1H21, the TTF Day Ahead price averaged $274/mcm and the Brent price averaged $65.2/bbl. The dynamics look positive for Gazprom. When combined with the very positive pricing environment, this should mean a very strong Q2 for Gazprom.
127 RUSSIA Country Report July 2021 www.intellinews.com