Page 122 - RusRPTJun21

In terms of volumes, current storage levels of c36bcm are c39bcm below the 75bcm of this time last year, and 17bcm below what would be expected in a ‘normal’ year.
A cold April exacerbates the effect of a cold winter in Asia and Europe. Last year European gas storage was at record highs following a large buildup in 2019 ahead of the expiration of the Russian-Ukrainian gas transit contract (which proved to be a non-event) and demand reductions from a record-warm winter in Europe and the COVID-19 crisis.
Spot gas prices in Europe fell below $1/mcf ($35/mcm) last summer, forcing US LNG suppliers to shut down production and handing Gazprom is worst quarter (2Q20) in over 15 years. The market situation in 2021 has so far been much more beneficial, first with an LNG shortage in January driven by very cold weather in Asia, then with Europe’s own blast of cold in February driving up domestic consumption, and now with an abnormally cold April delaying the onset of the gas refill season.
The Russian government has approved the roadmap for the gasification of Russian regions. Its key points are as follows.
· Gazprom is to become the unified gasification operator within the Unified Gas Supply System and in some other Russian regions.
· Social gasification (connecting households to the gas grid free of charge for retail consumers) might be financed through increased gas distribution tariffs and evening out tariffs for different consumer groups. The final decision on this is to be taken in the near future, as the ministries of Finance, Energy, Economic Development and Industry, as well as the Federal Anti-Monopoly Service are to provide their proposals on this in May and by the end of 2Q21.
· Social gasification is to be tried in several Russian regions (not fewer than eight).
· In 2Q21, the government, along with Gazprom and other entities, is to prepare and review proposals for creating a single system for producing and distributing gas in Eastern Siberia and the Russian Far East. The system might include independent gas producers and could allow for different gas pricing options (including export netback).
Gazprom is to spend RUB 526bn on gasification in the next five years (offshoot pipelines, gas distributing plants and intersettlement pipelines). According to previous reports (see our Morning Comment of 16 February), the overall cost of social gasification is estimated at RUB 2tn (USD 26bn) over the next ten years, including a government share of expenses. Previously, various options were discussed for financing social gasification, including amending gas transport and distribution tariffs, and indexing wholesale gas prices
The volume of gas pumped through the TurkStream gas pipeline, commissioned in 2020, amounted to 13.51bn cubic meters (bcm), Gazprom said in a report published on Thursday, TASS informed. TurkStream is an export gas pipeline from Russia to Turkey through the Black Sea. The design capacity is 31.5 bcm of gas per year. Last year, gas was supplied via
122 RUSSIA Country Report June 2021 www.intellinews.com