Page 13 - FSUOGM Week 03 2022

FSUOGM NEWS IN BRIEF FSUOGM

of Azerbaijan, SOCAR and Axens have a “As a reminder, the Yamal contract was oil transportation increased by 29% (1.5mn
long-term co-operation. In particular, the agreed upon in 1996 and calls for exports tonnes) compared to December 2020. In
construction of diesel fuel hydrotreatment, of 9.8 bcm [bn cubic metres] per annum particular, both oil transit (by 28.1%, to 1.2mn
gasoline hydrotreatment and C4 (butane- to Poland on a take-or-pay basis, with the tonnes) and oil transportation volumes to
butylene) fraction hydrogenation as part minimum volume set at 8.7 bcm pa,” Sova Ukrainian oil refineries (33.2%, to 267,000
of the BOR reconstruction project, the C3 Capital commented on January 17. tonnes) have increased, the company noted.
(propane-propylene) fraction hydrogenation Sova Capital does not expect any exports The route Pivdennyi Sea Oil Terminal–
unit as part of the reconstruction of the to Poland starting from 2023, and views the Brody–Mozyr oil refinery was launched
Azerkhimiya production association, the arbitration effort by Gazprom as “neutral at in 2020 to add additional capacity to the
naphtha hydrotreater, hydrotreatment of this juncture”. Ukrainian oil transportation system. In the
diesel fuel and hydrotreatment of kerosene “Gazprom could use Poland’s inconsistency span of two years, 1.6mn tonnes of oil were
at the Turkish refinery STAR was carried out on the issue as an argument in its favour, as transported via this pipeline.
under licence from Axens. Poland previously sought to unlink gas prices Havrylenko announced plans to expand
“Also, some time ago, SOCAR Turkiye’s to oil products as the original contract was the tank farm of the Pivdennyi Sea Oil
AR-GE Research Center and Axens started still in place, and Poland asked Gazprom Terminal in September 2020, with the
work to identify opportunities for co- to lower prices in October 2021, as they are installation of four tanks with a capacity of
operation in the field of research and identify linked to hub prices, which were above oil- 120,000 tonnes each.
common interests,” the statement says. linked prices,” the analysts at Sova argue. Internal oil transportation to Ukrainian oil
As reported, in 2022 SOCAR will receive At the same time, the move by Gazprom refineries has been gradually expanding since
AZN214mn (~$126mn) from the state budget could also have some geopolitical 2016. However, Ukraine does not produce
for the modernisation of the BOR. As part of connotations, Sova Capital believes. a large volume of oil, importing most of its
the modernisation, the State Oil Company “The ongoing battle between Gazprom and needs from Russia and Belarus.
of Azerbaijan plans to start producing diesel PGNiG over gas prices is mostly about past As part of the 2021 energy sector reforms
fuel in accordance with Euro-5 standards at deliveries, not future, and Europe’s pending the government liberalised access for gas
the Baku Oil Refinery in mid-2022, gasoline regulatory approval of Nord Stream 2, which producing companies to large and promising
in accordance with Euro-5 standards in Poland bitterly opposes,” BCS Global Markets oil and gas fields both onshore and offshore.
2023. This will complete the current stage of commented. Naftogaz unites the largest oil and gas
modernisation of the BOR. After that, the VTB Capital (VTBC) also treats the news companies in Ukraine. The group is a
plant will produce AI-92 and AI-95 types of as not market-moving, noting that “history monopoly for the storage of natural gas
gasoline. suggests that the court is unlikely to take a in underground storage facilities and the
SOCAR expects to complete the decision soon”. transportation of oil by pipeline throughout
reconstruction and modernisation of the VTBC also reminds that PGNiG had stated the country.
BOR by 2024-2025. After modernisation, the earlier that it did not plan to renew its contract
plant will produce 2.2mn tonnes per year of with Gazprom beyond 2022, replacing it
motor gasoline instead of the current 1.2mn with LNG from Qatar and the US, as well as Moldovagaz pays Gazprom
tpy, diesel fuel at 2.9mn tpy instead of the pipeline deliveries from the North Sea. VTBC
current 1.9mn tpy, jet fuel at 1mn tpy instead maintained a Hold call on Gazprom shares, for gas sent in December
of the current 600,000 tpy, and petrochemical with BCS GM and Sova Capital having a Buy
products at 390,000 tpy instead of the current recommendation.. Moldova’s gas transport and distribution
112,000 tpy. company Moldovagaz said that it already
The cost of the project for modernisation paid Gazprom for the natural gas delivered in
and reconstruction of the BOR was estimated Ukraine transports record oil December, thanks to the end-users who paid
at $2.2bn. in advance their bills.
However, the company still has to pay the
volume to refineries advance payment for January by January 20,
Gazprom files arbitration Ukrtransnafta, Ukraine’s state-run pipeline meaning half of the estimated deliveries in the
operator, transported a decade-high volume
first month of the year.
against PGNiG over price of oil to Ukrainian oil refineries in 2021, with increased significantly to nearly $650 per
The price charged by Gazprom for January
an annual total of 3mn tonnes (15% more
Russian natural gas giant Gazprom filed for an than 2020), announced Naftogaz in a press 1,000 cubic metres, namely $200 more
arbitration in the Stockholm Arbitral Tribunal statement on 14 January. compared to the price paid in December
against Polish PGNiG, contesting the price “Significant development of oil (initially media reported a $100 monthly
for the Yamal supplies contract which was up transportation to Ukrainian oil refineries increase based on assumptions of a December
for revision in December 2017 and November and storage of transportation via Pivdennyi 2021 price estimated at $550, which eventually
2020, Vedomosti daily reported. Sea Oil Terminal–Brody–Mozyr oil refinery turned out to be $450).
As followed by bne IntelliNews, the debate helped load the capacities of the Ukrainian Deputy Prime Minister Andrei Spinu said
around Russian involvement in Europe has oil transportation system and keep total he had asked Gazprom CEO Aleksei Miller
reached a new intensity recently amidst transportation volumes at the level of to consider the possibility of postponing the
skyrocketing gas prices, the expected start previous years,” noted director-general of advanced payment for January by 10-20 days
of Nord Stream 2 and the threat of an open Ukrtransnafta Mykola Havrylenko. so that Moldovagaz could accumulate funds.
conflict in Ukraine. At the same time, oil transit via pipeline Last November, Gazprom was close to
Poland notified Gazprom in 2019 that transport across the territory of Ukraine discontinuing its gas supplies to Moldova
it does not intend to renew the contract. In dropped in 2021 by 3.2% to 12.7mn tonnes. as Moldovagaz was a couple of days late in
2020, Gazprom lost in arbitration and was The total volume of oil transportation in paying its monthly bill...
forced to pay PGNiG $1.5bn and change its 2021 was 15.7mn tonnes, 0.2% less than 2020.
price formula to the spot-linked calculation. In December 2021, the total volume of

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