Page 5 - FSUOGM Week 25
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FSUOGM COMMENTARY FSUOGM
delayed the o ering a er investors demanded too high a return.
Differing stances
Russia and Ukraine still have some way to go before reaching a compromise in the contract talks. Moscow wants to extend the existing tran- sit agreement for a short- or medium-term, pre- sumably to allow it to slash volumes once Nord Stream 2 begins pumping gas. On the other hand, Kyiv is looking to agree a new contract guaranteeing the supply of at least 60 bcm per year of Russian gas over a 10-year period. e European Commission too is pressing Russia for a guarantee that a “substantial” volume of gas will continue owing through Ukraine.
Na ogaz has recently even suggested a swap arrangement, whereby Gazprom would sell its gas to the company at the Russia-Ukraine border, with Kyiv then transferring the same amount at its border with the EU. Neither Mos- cow nor Brussels is likely to back such a proposal, however, as it would give Ukraine too much con- trol over the bloc’s gas supply security.
Further complicating talks, Gazprom Export head Elena Burmistrova was cited by Platts in a recent press brie ng as saying that the Russian group was unclear on who it should be negoti- ating with on the Ukrainian side, amid ongoing reforms in the country’s gas sector.
Na ogaz is due to spin o its transit division, transferring control to a newly set up operator called MGU. Gazprom has said previously it will not negotiate a new transit contract until the unbundling is complete and MGU is given responsibility for operating the country’s gas grid. But the Ukrainian government insists that Gazprom deal with Na ogaz, and has temporar- ily transferred managerial control of MGU from the energy ministry to Na ogaz until the start of 2020.
A breakthrough is unlikely until, at the very earliest, the next round of trilateral talks between Russia, Ukraine and the EU tentatively scheduled for the second half of September. Until then, Ukraine’s future as a transit route and Europe’s gas supply security hangs in the balance.
PIPELINES & TRANSPORT
Novatek ships first cargo to Japan
RUSSIA
Japan has played a critical role in the development of Russia’s LNG supplies in the Sakhalin region.
NOVATEK has shipped a rst cargo of LNG to Japan, the Russian independent gas company said on June 26. e cargo was delivered under a long-term o ake agreement with Total. It was delivered to the Tobata LNG terminal.
“Commencing LNG shipments to the Japa- nese market represents an important milestone for the company as Japan is an important LNG market and one of the priority destinations in our LNG marketing strategy,” said Novatek’s chairman, Leonid Mikhelson.
Japan has played a critical role in the devel- opment of Russia’s LNG supplies in the Sakhalin region. While Yamal LNG is further away, it is evident that the Asian market is critical, even if deliveries are required to use the Northern Sea Route (NSR), or face a long round trip.
e main emphasis for Novatek and its LNG developments has been China. Chinese com- panies are invested in both Yamal LNG and the proposed Arctic LNG 2 plan, which should reach nal investment decision (FID) this year.
Japan, though, is the largest LNG importer in the world, taking around 83 million tonnes in 2018, while China’s imports hit 53.7 million tonnes. While Japan’s demand is on the way
down, Chinese consumption is increasing. Novatek’s Asian expansion would benefit from its plans for transhipment terminal, in Kamchatka. is would allow the company to use its ice-breaking LNG carriers (LNGCs) in the sea areas where such equipment is neces- sary and o oad cargoes to be carried onward by
cheaper LNGCs.
Commenting this week, Mikhelson high-
lighted the importance of the NSR and the Kam- chatka terminal, which would “expand LNG supplies to Japan as well as strengthen trade and economic links between our respective countries”.
In addition to this transhipment terminal plan, though, Novatek has also signed a deal with Japan’s Saibu Gas on using the Hibiki LNG terminal. e company said this would allow it to “diversify our customer base and increase the exibility of deliv- eries to the premium LNG markets”.
e Yamal LNG plant reached full capacity at its three trains in December 2018, with a smaller fourth train due to start up at the end of this year. During 2018, the plant sent its rst cargo to Brazil in September, to China in July, to Spain in June and to India in March.
Week 25 26•June•2019 w w w . N E W S B A S E . c o m
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