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develop offshore fields. Due to this, the lack of lower cost technologies, sanctions, and the low degree of localisation of equipment and technologies, MinEnergo forecasts that production at offshore fields will go down to a third (in the base scenario) or a half (in the upbeat scenario) by 2035.
· Another potential challenge is posed by the increasing concentration of sulphur in oil exported through Transneft’s pipelines. To circumvent this problem, a separate export route through Ust’-Luga might be created for high-sulphur oil, to keep sulphur content in export pipelines low.
· Among the potential pipeline projects, the document names increasing the capacity of the Aleksandrovskoye-Anzhero-Sudzhensk-Taishet pipeline to ensure fuller ESPO utilisation, constructing the Kharyaga-Usa pipeline, expanding the Igolsko-Talovoye-Parabel pipeline, as well as increasing the utilisation of the Zapolyarye-Purpe and Kuyumba-Taishet pipelines (currently underutilised). If there is sufficient demand from oil companies, a third stage of Project South might be considered (construction of an oil product pipeline from Samara to Volgograd and increasing the capacity of the oil product pipeline section between Volgograd and Novorossiysk to 11mnt/a). In a similar vein, increasing the capacity of the oil product pipeline route to Primorsk to 27mnt/a might be considered.
A new report by the European Commission (EC) reveals domestic gas output in the EU amounted to 54bn cubic meters (bcm) in 2020, down from 70 bcm in the previous year. Production was down 22.8% year-on-year, RT informs. The Netherlands produced 24 bcm of gas (versus 33.7 bcm in 2019) followed by Romania with 9 bcm (10 bcm in 2019) and Germany with 4.9 bcm (5.7 bcm in 2019). In the fourth quarter of 2020, EU gas production reached approximately 13.7 bcm, 15% (2.4 bcm) less than in the same quarter of 2019. “During the whole Q4 2020, similarly to the previous three quarters, gas output was below the 2015-2019 range, reflecting the dwindling trend of gas production in the EU. Over the last seven years, total EU gas production in Q4 2020 was the second lowest quarterly figure,” said the report. The EC also said the “widespread practice of teleworking might have contributed to the increase of natural gas consumption in the residential sector in year-on-year comparison.” EU gas consumption in the fourth quarter of 2020 rose slightly, by 1.3% (1.5 bcm) compared with the same period of the prior year, to an estimated 119.2 bcm. It was also up from the 71.9 bcm in Q3 2020, with the onset of the heating season in October.
European gas prices have reached $249/kcm on the back of the cold weather expected this week. This is the highest in two months. We note that TTF averaged $231/kcm in 1Q21, while in April to date it has averaged $239/kcm. While the current gas price is comparable with its winter months values, we expect it to moderate as the weather improves. We note that daily
126 RUSSIA Country Report May 2021 www.intellinews.com