Page 96 - RusRPTApr20

more profitable now than exports to Europe. For example, in the Leningrad Region, the wholesale gas price at the current ruble exchange rate is $57.7 per 1,000 cubic meters, report RAPSI. On the other hand, the export netback value for Nord Stream supplies to Germany at current prices at the German NCG hub of $101 per 1,000 cubic meters is about $48 (taking into account the export duty of 30% and transportation fees of about $22 per 1,000 cubic meters).
Exports of Russian oil to China was down 28% in January 2020 due to the coronavirus (COVID-19) epidemic, RBC business portal reported citing the data by the Federal Customs Service. The value of exports was at about $2bn, as compared to $2.8bn for the same month of 2019. In physical volume terms the oil exports to China were down by 36%. Total exports from Russia to China was down by 7%. Despite the decline in exports, China remains the largest buyer of Russian oil with, followed by the Netherlands ($1.3bn), Germany ($1bn), and Italy ($0.6bn). RBC reminds that Chinese industrial output dropped by 13.5% in January-February, the worst decline in 30 years. Previously the Finance Minister Anton Siluanov estimated that Russia's daily losses from slower economic activity in China amount to RUB1bn.
The spot price of Russian Urals blend oil supplied to North-Western Europe dropped by 22% to $18.64 per barrel to the lowest since 2002, Vedomosti daily reported citing Argus Media. The dive in the price is attributed to the information that shipments of Urals from Baltic ports increased planned for April 1-5 increased by 25% to 2mn barrels daily. Russia's Finance Ministry estimated that at Urals price of $17.4 per barrel the Russian budget could miss up to $3.3bn monthly. Urals usually trades with discount to benchmark Brent oil and follows its price movements. The Finance Minister Anton Siluanov expects the federal budget to miss RUB3 trillion of oil and gas revenues in 2020 due to low oil prices, Reuters reported on March 18.
Russia’s Energy Minister Alexander Novak said the conditions are not right yet for a new production cut deal with the OPEC oil cartel as price remain at around $32 per barrel. Novak made the comments after meeting with the leading domestic oil companies on March 12 adding that he does not see conditions for a new agreement at the moment due to the actions of OPEC partners. Novak reported that Russian oil companies could increase oil production by 200,000 barrels per day after the OPEC+ agreement expires in April, but further growth will take time. "We can restore production that was reduced due to the OPEC+ agreement against October 2018 quite quickly. As for additional production, it will take some time to ensure investment expenditures," he said. "I think the full volume, which was reduced, 200,000, can be restored.”
Russia’s Gazprom and China’s CNPC intend to suspend gas flows via the Power of Siberia pipeline in the second half of March so that repairs can be carried out. The pair are currently finalising the exact dates that the routine maintenance will take place, RIA Novosti reported on March 10, citing Gazprom. Gazprom and CNPC have agreed to carry out maintenance on Power of Siberia twice a year in spring and autumn. Power of Siberia is capable of flowing up to 38bn cubic metres per year of gas. The pipeline was launched in December and had pumped 840mn cubic metres of gas to China from fields in Eastern Siberia by the start of March. It is due to flow a total of 4.6 bcm of gas this year and ramp up to full capacity in 2025. China has seen a significant slowdown in gas demand growth as a result of efforts to combat the spread of the coronavirus (COVID-19). This has led state gas importers to
96 RUSSIA Country Report April 2020 www.intellinews.com