Page 14 - FSUOGM Week 03 2022

FSUOGM NEWS IN BRIEF FSUOGM

Novatek kicks off 2022 with surprisingly robust international gas pricing Tengiz, and production facilities are operating
“For catalysts, we are looking for
at normal rates,” Chevron said.
LNG deals come summer due to heavy European storage barrels per day (bpd) in January-November
Tengiz crude production averaged 565,000
refill, and to potential further announcements
Russian gas major Novatek has announced around Novatek’s slate of new LNG and 2021. A state-owned monitoring website that
two new long-term liquefied natural gas petrochem projects on the Yamal and Gydan posts daily Kazakh production levels showed
(LNG) sale and purchase agreements (SPAs) Peninsulas,” the analysts wrote. a 77,000 bpd drop in crude and condensate
with Chinese companies for the LNG production on January 9 compared to
produced by the Arctic LNG 2 project. December 30 before the protests began. .
The total deliveries will amount to up Botas agrees to deliver gas
to 1.6mn tonnes per year (tpy) of LNG
contracted by Zhejiang Energy Group (up to to SOCAR Turkey Taliban set to sign final
1mn tpy for a period of 15 years) and by ENN
Natural Gas (0.6mn tpy for 11 years). Turkey’s state-owned Petroleum Pipeline agreements for TAPI
As reported by bne IntelliNews, Arctic Corporation (botas) will deliver up to
LNG-2 has secured €9.5bn ($11bn) in external 1.7bn cubic metres (bcm) of natural gas by The final seven agreements on the TAPI
financing, meaning it now has all funding December 31, 2024 to Azerbaijan-controlled (Turkmenistan-Afghanistan-Pakistan-
necessary to finish construction. The project SOCAR Turkey, official news service Anadolu India) gas pipeline project will soon be
will entail three liquefaction trains (6.6mn tpy Agency has reported. concluded and signed by the Taliban-led
capacity each) with commissioning scheduled Under a memorandum of understanding Afghan government, Afghanistan’s Tolo News
for 2023-25. signed by the Turkish and Azerbaijani energy reported on January 11, citing the country’s
In 2021 Novatek had already signed an ministries on December 22, Botas will deliver foreign ministry.
SPA with Shenergy Group for the delivery of natural gas to cover the needs of a group The announcement was made the day after
around 3mn tpy for 15 years, and reportedly companies under SOCAR Turkey. Taliban ministers said they would arrange
signed an SPA with Repsol for 1mn tpy The price of the gas volumes that Botas will for 30,000 fighters to provide security for
for 15 years, while also reportedly having send include the import price of the existing the infrastructure project. Attacks could be
unconfirmed agreements with traders Vitol gas sales and the purchase contract (SPA) mounted, for instance, by Islamic State –
(1mn tpy) and Glencore (0.6mn tpy). already in place. Additionally, the import price Khorasan Province (ISKP) terrorists who see
Sberbank CIB believes that the two new will cover the transportation tariff and other the Taliban as a foe.
SPAs with Chinese companies demonstrate transportation costs incurred by Botas in There remain doubts as to whether
that reasonable progress is being made with Turkey, and all applicable taxes, according to sufficient finance can be secured to complete
marketing Arctic LNG 2’s output. Of the the news service. the TAPI investment. For the Afghanistan
company’s share of future LNG from the The parties are expected to utilise the leg of the pipeline, the Taliban has said funds
Arctic LNG-2 project, the portion that has full available capacity of the Baku-Tbilisi- based on a foreign loan will be drawn in line
been contracted on a long-term basis has risen Erzurum and Trans Anatolian Natural Gas with Afghanistan’s budget for the current
to 24% if only including SPAs, and to 36% if Pipeline for the transmission of additional fiscal year.
also including the heads of agreement (HOAs) natural gas volumes that will be produced Taliban foreign ministry strategic research
with Vitol and Glencore, the analysts estimate. and transported from upstream projects in director Valliolah Shahin said an agreement
“We do not expect a tangible reaction from Azerbaijan. has been struck with Turkmenistan for the
the company’s shares to the news, but this is Botas was seeking a $2bn loan to pay provision of a loan to pay the project fee. The
positive for the company in the long term,” upcoming debts to suppliers, including borrowed funds would be repaid from future
VTB Capital (VTBC) commented on the Russia’s Gazprom (Moscow/GAZP), income generated by the operation of the gas
new deals, while maintaining a Buy call on anonymous sources told Bloomberg earlier pipeline, he said.
Novatek’s shares. this month. Afghanistan is expected to earn $500mn
The total volumes from Arctic LNG-2 In November, the central bank sold a dollar annually from the project.
should be 19.8mn tpy, of which 60%, or sum of $2.23bn to Botas, a record figure, and Taliban finance ministry spokesman
over 11mn tpy, should come to the main in December, the bank sold a dollar sum of Abdollah Hakmal confirmed the ministry’s
shareholder Novatek, BCS Global Markets $3.36bn to state institutions including the readiness to allocate funds for the TAPI
estimates. “With several other projects in pipeline company. . project and other development projects in the
development and in the midst of a historical current fiscal year.
seller’s market, we expect more such Taliban officials have repeatedly stated
announcements in the course of 2022,” the Chevron says Tengiz output that they attach particular importance to
analysts argue. the TAPI project and intend to ensure its
In a separate report BCS GM analysts back to normal implementation.
upgraded their recommendation on Novatek’s The project has been under way since
shares to Buy with a target price of $300/ADR Chevron, which leads the Tengizchevroil 2015 and has so far cost $10bn, according to
(20% estimated excess return). (TCO) consortium that operates Kazakhstan’s Turkmen officials.
Despite Novatek’s shares having fallen largest oil field, the Tengiz field, announced The concept for the pipeline is to connect
about 7% since mid-October 2021, mostly due on January 11 that production at the field has energy-rich Central Asia with energy-starved
to the rising perceived Russian political risk, been restored to normal levels. countries of South Asia.
commodity prices largely moved sideways in Production at Tengiz was cut last week In all, there are 16 TAPI agreements that
the period, BCS GM notes. amid the countrywide protests that led to require the Afghan government’s signature.
High gas prices are expected to persist into some workers disrupting train lines in support Nine were signed and sealed by the previous
2022 due to historically low gas storage, and of demonstrators. Chevron stands as the Afghan government, which dissolved and fled
Novatek is well positioned to fill what appears largest foreign oil producer in the Central when US-led forces completed their departure
to be a growing gap between gas supply and Asian nation with a 50% stake in the TCO from the country last summer, leading to the
demand with the upcoming LNG projects, joint venture. Taliban seizing power..
BCS GM believes. “The workplace environment is stable at

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