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declare forces majeure on their supply contracts, in an attempt to delay shipments. Kazakhstan’s gas grid operator Kaztransgas (KTG) confirmed on March 7 that it had received a force majeure notice from Chinese buyer PetroChina. It is contracted to deliver 10 bcm of gas to China annually. Gazprom said on March 5 it had not received such a notice from CNPC. But suppliers typically agree with buyers to time maintenance on facilities for when there is a lull in gas demand.
On March 6 OPEC proposed to additionally reduce quotas by 1.5mnbd and extend the restriction until end-2020 due to the 'C'-virus impact. OPEC members were invited to limit oil production to 1mnbd, and countries outside the cartel – to 0.5mnbd. During the OPEC+ meeting, Russia insisted on continuing current quotas for 2Q20. As a result, an agreement could not be reached – the current OPEC+ deal for a reduction of crude output by 1.7mnbd will be canceled from 2Q20.
Russia is set to roll out additional tax breaks aimed at incentivising the development of its Arctic oil and gas resources, and supporting the growth of its LNG and petrochemical industries. Under a new draft tax law approved by the State Duma on a second reading, offshore production will be subject to a mineral extraction tax (MET) rate of only 5% for oil and 1% for gas during the first 15 years of a project's commercial operation. This is good news for Gazprom, which controls a number of major fields in the Pechora and Barents Sea containing trillions of cubic metres of gas. The first of these fields, Kamennomysskoye-more, is due to start up in 2025 and flow 14.5bn cubic metres per year of gas at peak capacity, according to Gazprom’s latest investor presentation.
Oil prices averaged $61.68/bbI YTD as of March 1, while the futures oil curve now suggests the average Brent price of $54.96/bbl in 2020, compared with the $59.80/bbl assumed by analysts at the start of 2020.
9.1.2 Automotive sector news
The Car Sales report for February shows that car and LCV sales dropped 2.2% y/y to 119,073 units, according to the Association of European Businesses. Adjusted for the leap year effect, the drop would be even more dramatic (5.6% y/y, on our estimates).A deceleration in car sales in February is loosely related to the lateFebruary
ruble weakness.
Russia's car and LCV sales increased 2% y/y to 102,102 units in January
(excluding BMW and Mini sales, which are now reported on a quarterly basis), according to the Association of European Businesses (AEB). January is a seasonally low month, and analysts do not see it as an indicator of prevailing trends.
97 RUSSIA Country Report April 2020 www.intellinews.com