Page 70 - RusRPTJune18

Onshore fields remain preferable in the face of import restrictions on equipment due to sanctions. Expect deepening interest in Iran if initial projects advance.
The Belarusian government is going to restart Minsk-Moscow negotiations on the price for natural gas , Deputy Prime Minister of Belarus Vladimir Semashko told reporters on 29 May. "We should enter a new stage of the negotiations now in order to determine the pricing formula for creating a common Eurasian electricity market and a common oil and gas market," BELTA news agency quoted Semashko as saying. Oil and gas prices have been a source of tension between the allies and Belarus and Russia have been negotiating on the price the gas price for 20 years - Minsk is seeking to secure long-term intergovernmental agreements with the aim of obtaining Russian natural gas at the same prices the Russian consumer pays, while Moscow points out it is giving huge energy subsidies to Belarus already. In 2017, Russia was demanding that Belarus repay around $550mn for natural gas previously supplied by the state-controlled company Gazprom. Minsk bought Russian gas for $132 per 1,000 cubic metres, but it unilaterally lowered the price to under $80, saying this was a fair price trigging a debt row. According to Semashko, the 2018 price for Russian gas stands at $129 per 1,000 cubic metres, while next year it will be $127.
Russia's state-controlled natural gas giant Gazprom plans to maintain record-high exports in 2018 and plans to beat the export volume seen last year, Vedomosti daily said citing the CEO of the company Alexander Medvedev.
In January-April Gazprom has already shipped 70.3bcm (+6.3% or +4.1bcm year-on-year) with Germany, Austria, Netherlands, Greece and France reportedly the major recipients. The need to replenish stored gas volumes in European countries after an abnormally cold February and March has spurred demand for Gazprom's gas, Aton analysts believe.
VTB Capital notes on May 4 that the growth in Gazprom’s export volumes in April was also supported by problems in the Skarv field in Norway, and repair works on large gas pipelines and at gas treatment facilities, as well as lower supplies from Algeria to Italy.
Aton believes growing exports is a supportive story for Gazprom's shares, while reminding that due to a six-to-nine month lag between oil-linked gas prices and the oil price which means that Gazprom's gas is cheaper for now relative to the oil price as of mid-2017.
VTB, however, still expects Gazprom exports to remain flat y/y at the end of 2018 at around 192bcm despite the strong results so far, but acknowledges that strong operational data so far and the record low gas volumes in underground gas facilities in Europe represent some upside risk to the forecast.
In the meantime Gazprom also pledges to complete Sila Sibiri (Power of Siberia) pipeline to China by the end of 2018, according to a separate Vedomosti daily report of April 25 citing the corporate publication of the company.
As of March 1, reportedly, about 73% of the pipeline between Chayandisnkoye field and Chinese border has been completed. With technical tests planned for 2019, the supplies of gas to China are scheduled to be launched in December 2019.
As for Gazprom's Nord Stream 2 pipeline to Germany by way of Baltic Sea, the company has appointed contractors for building 538mn of the pipeline on mainland Russia, although the pipeline still requires full approval of
70 RUSSIA Country Report June 2018 www.intellinews.com