Page 7 - FSUOGM Week 30 2021

FSUOGM COMMENTARY FSUOGM

regulation. After the spike in fuel prices in 2018, insisted on a more moderate approach.
Russia reached agreements with oil companies Again, the ministry gave ground last month,
that regulated wholesale prices for eight months, though signing an agreement in principle to
and increased supplies. It then went on to intro- increase the minimum volumes of trade to 12%
duce the damper mechanism. for gasoline and 8.5% for diesel. But those adjust-
The government has also been discussing fur- ments have not yet entered into force, with the
ther increases in sales requirements on SPIMEX changes undergoing public discussion until July
for a year, but the energy ministry has generally 30.
resisted such measures. Until July 2020, major Defending the ministry’s position, Deputy
integrated fuel suppliers Rosneft, Lukoil and Energy Minister Pavel Sorokin said on July 21
Gazprom Neft had to sell at least 10% of their that he was hopeful that gasoline production
gasoline and 6% of diesel on the wholesale mar- in Russia would rise by the end of the month
ket, which in practice means SPIMEX. At that as more refineries complete their scheduled
time gasoline prices were surging as a rapid repairs. This should stabilise conditions on the
recovery in demand following Russia’s first coro- wholesale market, he said, noting that he consid-
navirus (COVID-19) lockdown caught suppliers ered the volume of gasoline that is currently sold
unaware. Many refiners had brought forward on SPIMEX as sufficient.
maintenance work, anticipating that consump- “Fuel companies maintain the production
tion would be sluggish for longer. and supply of fuel to the domestic market at an
The energy ministry caved under pressure increased level,” he said, estimating that refiners
in that instance, agreeing with the Federal Anti- had been supplying 30,500 tonnes per year (tpy)
monopoly Service (FAS) to raise the wholesale of gasoline on average to the exchange since the
requirements to 11% for gasoline and 7.5% for start of the month. This corresponds with the
diesel. FAS had been wanting requirements level of supply during the same period in 2019,
of 15% and 9% respectively, but the ministry prior to the pandemic, he said. ™

PIPELINES & TRANSPORT

No binding bids for extra

TAP capacity

AZERBAIJAN NO binding bids were lodged for additional TAP said it offered three expansion scenarios:
capacity in the 10bn cubic metre (bcm)/year a limited expansion to 14.4bcm/year, a partial
TAP had been Trans Adriatic Pipeline (TAP) that brings gas expansion to 17.1bcm/year and a full expansion
considering an from Azerbaijan via Georgia, Turkey, Greece to 20bcm/year. The earliest a capacity expansion
expansion of the and Albania to Europe, the operator announced for the pipeline, which makes landfall in south-
pipeline's capacity of up on July 22. ern Italy, could have been realised was October
to 20 bcm per year. As part of the binding phase of TAP's capacity 2026.
expansion market test, an invitation for bids to Platts Analytics said it had been skeptical on
be submitted from July 17-20 was sent out. TAP's expansion for a while given declining gas-
TAP, which was opened as the final segment for-power demand, an already reduced depend-
of interconnected pipelines that make up the ence on Russian gas due to the current TAP
Southern Gas Corridor (SGC), has been cele- capacity, as well as the expansion of the Passo
brated by the EU as providing effective diver- Gries interconnection point on the border with
sification away from over-reliance on Russian Switzerland.
gas. The result of the market test might pose "It is also understood that Turkey's vision of
questions as to the level of future European gas increased domestic gas production is limiting its
demand and the necessity of securing additional appetite for longer-term import commitments,
import capacity. reducing the need for further TANAP/TAP
"We weren't assuming any expansion of TAP expansions," it said.
in our long-term forecast so this certainly sup- Despite the lack of binding bids, non-binding
ports that view," S&P Global Platts Analytics' capacity and connection requests can be submit-
managing analyst James Huckstepp said. ted up to September 6 as part of the new market
"Despite prompt prices holding up close to test, TAP said.
all-time highs the curve is extremely backwar- TAP's shareholders are BP (20%), Azerbai-
dated, which likely reflects pessimism around jan's Socar (20%), Italy's Snam (20%), Belgium's
longer-term demand prospects," Huckstepp Fluxys (19%), Spain's Enagas (16%) and trader
said. Axpo (5%). ™

Week 30 28•July•2021 www. NEWSBASE .com P7