Page 95 - RusRPTApr20

months, analysts surveyed by Reuters say. Back in February, they expected the average cost of Brent this year to be $60.63 per barrel, but now the consensus forecast has dropped to $42 per barrel. This is due to the fact that in early March, Russia and Saudi Arabia began a price war in the oil market after the failure of negotiations to extend the OPEC + agreement, and with the global spread of coronavirus, which undermines oil demand.
Russia might start importing gasoline from Europe, as the current gasoline prices there are significantly below Russian internal gasoline wholesale prices, Kommersant reports. According to Reuters, imported European gasoline might cost around RUB37k/t (incl. all taxes) in the European part of Russia, while wholesale gasoline prices at SPIMEX are RUB41.50k/t and RUB43k/t for 92 and 95 gasoline, respectively. The Ministry of Finance does not currently plan to reconsider the damper mechanism, the paper reports. Import duties for gasoline might be introduced, according to Reuters sources, Kommersant writes.
Russia’s First Deputy Prime Minister Andrei Belousov said in an interview that oil prices should reach about $35-40 per barrel by the end of this year. Earlier, the Russian Ministry of Energy predicted that after the current drop in oil prices, the prices will rise to about $45-55 per barrel in the second half of the year. Next year, the prices should remain at the level of $40- 45, the ministry said.
Oil supplies from Russia to China in January 2020 fell by almost 30%
compared to the same month of 2019 in monetary terms, while in physical terms, the decrease is even more noticeable – 36%, Gazeta.ru reports citing official data. Crude oil exports reached $2bn compared to $2.8bn in 2019. The reduction in supplies in physical terms was even more sharply marked – 36%. The total value of oil products exported to China decreased by 20%: in January of this year, it amounted to $458mn and at the beginning of the winter last year – $569mn. Overall supplies from Russia to China decreased by 6.8%, from $4.24bn to $3.94bn. Earlier it was reported that in the first two months of 2020, China increased oil imports by 5.2%, and natural gas – by 2.8%. Domestic oil production in January-February also increased by 3.7%, reaching 32mn tons. An even sharper growth was observed in the production of natural gas – by 8%. At the same time, oil refining for the same period fell by 3.8% to 99.2mn tons, according to official Russia sources. An increase is noted in categories such as vegetable oil, copper, fish, and seafood. At the same time, total trade with China increased slightly due to the growth of Russia’s imports from China.
Gas prices in Europe have fallen to new historical seasonal lows. Average TTF prices in March declined to $102/kcm and reached $90.30/kcm on 19 March. The prices on Gazprom's oil-linked prices are nearing this level. Gazprom's export volumes have not fallen considerably, though. In March, supplies through Nord Stream averaged 189.5mmcm/d, while transit volumes through Ukraine were 150mmcm/d. However, as a result of widespread quarantine measures in Europe, Gazprom's customers might invoke force majeure clauses in contracts for gas deliveries and reduce their take-or-pay commitments, Kommersant writes.
Gazprom Export is expecting the lowest gas prices in 15 years on the European market this year, due to the fall in demand from the various crises. Spot prices have fallen to the level of $100 per 1,000 cubic meter, while oil- related prices are approaching that level. Gas supplies to Central Russia are
95 RUSSIA Country Report April 2020 www.intellinews.com