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elevated,” BCS GM said. “Additionally, we think “We could be conservative on either or both,
that investments at the Ust Luga gas processing resulting in significantly higher revenues and
project (also called the Baltic LNG project) may available cash for investments,” BCS GM said.
be accelerating faster than we had anticipated, “If that is the case, and if management is right
and that the regional gasification programme, in this optimism, then the implication is that
which has become a high-priority activity in our dividend forecasts on 2023e results are also
the last couple of years, may be absorbing more excessively low.”
money, as well.” Without the Nord Stream pipelines the vol-
However, BCS GM cautions that Gazprom’s umes of gas Russia can send to Europe has been
investment budget could imply an optimistic greatly reduced but it still has several other pipe-
outlook on 2023 earnings. lines that are still working.
“Gazprom’s traditional approach to invest- The most important of those is the traditional
ment forecasting in most years has been to set route via Ukraine, which under the terms of a
the initial budget no higher than a projection of new deal signed in 2019 can carry 32bcm a year,
available cash flows based on deliberately con- but currently volumes have been halved from
servative forecasts of volumes and pricing,” BCS previous years.
GM said. “Therefore, one interpretation of this There is also the Turk Stream gas pipeline
budget is that management is substantially more that supplies southern Europe and came online
optimistic than we are regarding the state of the in January 2020. Turk Stream has a nameplate
company’s European gas export franchise.” capacity of 31.5bcm, but half of that volume is
BCS GM assumes that Gazprom will export dedicated to supplying the Turkish market, leav-
a mere 65 bcm of gas to Europe and Turkey next ing little for Europe. Another potential invest-
year, compared with an estimated 85 bcm in ment project is to build a second strand of Turk
2022 and 175 bcm in 2021. The brokerage pro- Stream to supply southern Europe.
jects that Gazprom will sell its gas in Europe on Azerbaijan recently signed a deal with the
average at $1,035 per 1,000 cubic metres, includ- EU to increase its gas deliveries to Europe from
ing $300-350 per 1,000 cubic metres under oil around 8bcm to 20bcm in the coming years. Last
price-linked contracts and a forecast $1,500 per week Gazprom announced it was sending more
1,000 cubic metres according to gas hub-based gas to Azerbaijan that will free the country to
pricing. send more gas to Europe.™

Week 47 24•November•2022 www. NEWSBASE .com P9