Page 12 - FSUOGM Week 42 2021

FSUOGM ENERGY TRANSITION FSUOGM

and 4.5% for coal. in 9M21, Bloomberg reported.
“The generation split expectations provided Gazprom has been rushing to fill Russia’s own
by MinEnergo are similar to those that the gas storage tanks as it faces the same shortages as
Ministry for Economic Development has in its the rest of Europe. However, BCS GM reported
target (intensive) scenario in the latest low-car- on October 13 that Gazprom had resumed offer-
bon strategy draft,” VTB Capital (VTBC) said ing gas on the St Petersburg exchange, suggesting
in a note. “The outlook thus suggests a further that the Russian tanks are now almost full. Gas
reduction in renewables costs, coal decommis- trading on the St Petersburg exchange rose to
sioning (to only 4-4.5% in electricity generation 8mn cubic metres per day. This is up from less
by 2050) and decarbonisation mode being acti- than 1 mcm per day recently, with the extra gas
vated. This supports our anticipated growth in coming from Gazprom.
renewables (to 12.5% by 2050 in both scenarios) “A sign that Russian storage fill may be
in the energy balance, which is a natural process approaching completion. Gazprom largely
in our view.” withdrew gas from SPIMEX in August due to
Russian utilities have been starting to change the fire in its gas condensate processing plant
their profile, but only slowly. The most advanced at Urengoy, with demand for an unusually large
is the Italian Enel Russia, which has gone emis- refill of depleted Russian storage and an atypi-
sions-free after it sold its coal-fired Reftinskaya cally early start to the Russian heating season
thermal power plant (TPP) in October 2019 and occurring in early September,” BCS GM said in
has been investing heavily into renewables. a note. “However, in recent days, the weather in
Other big polluters like metallurgical giants the European part of Russia has been pleasant,
Norilsk Nickel and RusAl have also been clean- while Gazprom’s management has signalled that
ing up their act and closing down high-emis- domestic storage should reach planned fill levels
sions facilities as part of a drive to improve their in the coming days. If the weather remains rea-
environmental, social and governance (ESG) sonably warm – no cooler than typical seasonal
profiles that have affected their stock prices. levels – then Gazprom should be able to offer
larger amounts for domestic or international
Changing European energy market deliveries relatively soon.”
In wide-ranging comments Putin went on to The increase in gas prices in Europe has been
describe the changing energy environment driven by the electricity deficit, as renewables
in Europe. Specifically he lambasted Europe’s capacity was suppressed, while after the end of
energy policies, saying that the EU had become the previous heating season gas levels in storage
over-reliant on wind power, which had under- were not properly restored, Putin argued. Russia
performed this summer due to a “wind drought.” is not using energy as a weapon against Europe

He went on to stress that Russia was a reliable and stands ready to help the region as its energy
energy supply and had strictly been adhering to crisis continues.
its gas new transit deal signed at the last minute
with Ukraine in December 2019 that commits Putin repeated that the gas crisis in Europe
Russia to send 40bn cubic metres of gas via could be quickly ended if Nord Stream 2 gas
Ukraine’s Druzhba pipeline until 2024. pipeline were put into operation. Gazprom has
However, he reiterated the increasingly already loaded the pipeline, that was completed
prominent Kremlin talking point that if Europe in September, with technical gas and in theory it
wants more gas it has to sign new long-term could be put into operation tomorrow.
supply contracts with Gazprom. “We have to “The Nord Stream 1 and Nord Stream 2 pipe-
know how much gas our customers want,” Putin lines are set to ensure the sustainability of gas
said. Even without these new contracts Gaz- supplies to Europe and reduce GHG emissions,”
prom is expected to ship a record amount of Putin said. “Nord Stream 2 AG continues to
gas to Europe this year that is being sold on the resolve the issues related to the certification with
spot markets on the St Petersburg commodity the German regulators, but the administrative
exchange. barriers to the launch of Nord Stream 2 are not
The previous record exports of gas to Europe being removed. The gas pipeline would reduce
reached 200.7 bcm in 2018. In September Gaz- tensions and prices.”
prom guided for 183 bcm of exports this year, VTBC comments that despite the easing
but analysts say these exports will reach 190 bcm of tensions in the gas market the elevated cur-
for this year and could easily be higher. rent gas price of $1,123 per 1,000 cubic metres
At the same time, Europe has seen a decrease is indicative of continuing shortages that could
in imports of gas from other source. Specifi- amount to a gas deficit of 10-15 bcm for the
cally he said that US LNG exports to Europe upcoming heating season on the continent.
have fallen by some 14 bcm – approximately “We believe that in such a case, Gazprom
the amount that is anticipated to be Europe’s would be able to draw additional (so-called
gas deficit this year – drawn off to Asia by even emergency) capacity into production, providing
higher prices than in Europe. more gas to Europe if requested by its European
Putin added that Russia plans to export 10% counterparties,” Sova Capital said in a note. “We
more than the contract level via Ukraine to therefore think that such an elevated gas price
Europe (approximately 44 bcm in total). Russia level is not sustainable and is set to adjust down-
has already increased supplies to Europe by 15% ward.” ™

P12 www. NEWSBASE .com Week 42 20•October•2021