Page 19 - FSUOGM Week 42 2021

FSUOGM NEWS IN BRIEF FSUOGM

oil products from Russia and Belarus to on the month to 9.944 million barrels per Green policies set to reduce
Ukraine and Latvia. day, the Joint Organizations Data Initiative
To remind, in 2020 Belarus raised the (JODI) said in a report on October 18. EU gas demand to baseload
income tax from 18% to 50% (the increase The U.S. produced 11.181mn barrels
only applied to two enterprises, among per day, a fall by 1.1%. The output of Saudi core
which was Transneft) and introduced Arabia, which was number three, rose by
an environmental tax in the amount of 0.9% to 9.562mn barrels per day. While the current gas crisis in the EU
RUB0.35 ($0.0047) per 1tonne/100km of oil Russia’s oil processing rose by 5.4% on is seeing record-high wholesale gas prices,
transportation. the month to 5.985mn barrels per day in hurting consumers and causing the latest
Transneft also warned earlier that August. round of a supply disputes with Russia,
volumes transported in the export diesel the race to net zero by 2050 could have
pipeline through Belarus are to decline deeper long-term consequences for EU gas
from 6mn tonnes in 2019 to 3.4mn demand.
tonnes annually in 2021-2024. Lower EASTERN EUROPE The EU’s Green Deal policy has
transportation volumes and higher income developed a wide range of policies and
tax drove the subsidiary’s net profit below Serbia lobbies Russia for targets to reach net zero, and gas demand
zero. is likely to plummet as Europe accepts
"We treat the news as potentially negative lower gas price renewable technology.
for Transneft, although we would not expect One key issue for fossil fuel exporters
any immediate effect on the company’s The price of natural gas from Russia would into the EU is that greater energy
financials. If the company opts to write-off be three times what Serbia pays now, independence is a key pillar of the Green
the asset, this might lower the dividends namely $270 per thousand cubic metres, Deal, meaning far lower fossil fuel imports.
by some RUB 900/share," VTB Capital local media reported. Meanwhile, the current volatile gas
analysts warned on October 14, while still Serbian President Aleksandar Vucic said market is partly the result of Europe’s
maintaining a Buy call on preferred shares recently on TV Prva that the Russians had preference for spot contracts on the
of Transneft. offered Serbia gas with a calculation of 70% wholesale market, rather than long-term
Previously Transneft confirmed the of the market price and a 30% oil formula, contracts with the likes of Russia.
dividend strategy after being seen by the which would amount to $790 per thousand Demand in Europe has surged after the
analysts as turning into a strong dividend cubic metres. coronavirus (COVID-19) pandemic, aided
investment play. . “I told them that we couldn’t pay that,” by cold temperatures, rising power demand
Vucic said and added that he had asked for and growing appetite for LNG in Asia.
a reverse calculation with a formula of at Supply has proved unable to keep pace.
Russia may produce 120mn least 30% market and 70% oil. The price MWh at the beginning of April €35 per
Wholesale prices rose from €19 per
in that case, he said, would be $510, the
tpy of LNG by 2030: Novatek eKapija portal reported. MWh by the end of June. But August and
“However, we can’t afford even that,”
September saw the average spot wholesale
CEO Vucic said and added that he was “begging price soar to new record levels of €70-80 per
Putin for an extension of the payment
MWh.
By 2030, Russia’s liquefied natural gas according to a 100% oil formula, at least The crisis highlights Europe’s gas
(LNG) output can reach 120 million tonnes until the end of the heating season”. demand in the longer term, just as the EU
per year, but monetization of the reserves On January 1, Serbia’s 10-year agreement has launched its Green Deal and there is
should go faster, LNG producer Novatek on the export of Russian gas expires, and consensus over reaching net zero by 2050.
CEO Leonid Mikhelson said at a forum on Vucic’s meeting with Putin, where, among Just how much gas Europe will need
October 18. other things, gas will be discussed, is by 2050 is crucial. One forecast is that by
“It is realistic for Russia to consider provisionally scheduled for November 25.. 2050, Europe would need only 50-60bn
(output of) 120 million tonnes by 2030. We cubic metres of unabated gas demand in
have to do it,” the corporate said. order to meet net zero, according to recent
Today, Russia’s LNG production stands at DTEK Oil & Gas natural gas comments from Jonathon Stern at the
just over 30 million tonnes a year provided Oxford Institute for Energy Studies.
by the Yamal LNG and Sakhalin-2 facilities. production rose 11% in 9M21 This compares with 380 bcm of demand
The world’s top-3 LNG producers are in 2020, way below 469 bcm in 2019 .
the US, Qatar and Australia with about 77 Natural gas production at Ukraine’s As such, around 300-320 bcm of annual
million tonnes of LNG per year each. Russia largest private producer DTEK Oil & Gas gas demand is set to disappear in Europe as
has the reserves needed to catch up with (DTEKOG) rose 11% yy in 9M21 to about the EU pursues alternative fuels.
the leaders, but they should be monetized 1.5 bcm (35.9 thsd boepd), according to The existing gas grid will also have to be
quickly, Mikhelson said. its press release published on October 12. retrofitted to cope with alternatives such
On September 12, the company launched a as biomethane, hydrogen and CCUS, and
newly-drilled Machukhske-58 well (depth be able contribute to a more hybrid system
JODI: Russia remains 5.36 km) with the output of 300 tcm per day combining electrification and storage,
ENTSOG, the trade body representing
(2.0 thsd boepd), the release said, adding
world's 2nd largest oil that so far in 2021 DTEK Oil & Gas has national TSOs, said.
However, as key issue in both Russia and
completed the drilling of four wells.
producer in Aug DTEK Oil & Gas to produce at least 1.95- the EU’s thinking will be how much of the
Analysts at Concorde Capital expect
smaller demand will be baseload, meaning
Russia retained its position of the world’s 2.00 bcm of natural gas in 2021 (34.9-35.8 that it needs to be from a reliable and long-
second largest oil producer after the U.S. thsd boepd), or 6-9% more y/y. term source of demand.
in August, when its output grew by 1.1% The EU’s Green Deal still calls for a

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