Page 13 - FSUOGM Week 01 2021

FSUOGM NEWS IN BRIEF FSUOGM

DTEK Oil & Gas might have to Iran begins natural gas motor gasoline amounted to about 1mn
During this period, the production of
sell 140 mcm of gas at cost swap with Turkmenistan and tonnes (an increase of 6.8%), straight-run
gasoline (naphtha) was 370,700 tonnes (an
Private natural gas producers in Ukraine, Azerbaijan increase of 2.3 times), diesel fuel 2 mn tonnes
including the country’s largest DTEK Oil & (an increase of 19%), heating oil 59,300 tonnes
Gas (DTEKOG), might be forced to sell up Iran’s Oil Ministry has announced that the (an increase of 1.5%), lubricating oils 46,500
to 20% of their production during January- country has begun a natural gas swap with tonnes (an increase of 60.9 %), petroleum
April at regulated prices, according to two Turkmenistan and Azerbaijan as part of a coke 235,000 tonnes (an increase of 30.9%)
Cabinet of Ministers’ resolutions published on trilateral agreement recently signed by the The production of petroleum bitumen in
December 30. three neighbours, IFP reported on January 2. the reporting period amounted to 347,200
The regulated prices will amount to the Based on the agreement, Iran’s northern tonnes (corresponds to the indicator of
producers’ cost plus a 24% markup to costs provinces will receive gas from Turkmenistan January-November 2020), aviation kerosene
other than extraction royalty, according to in exchange for gas transported to Azerbaijan 440,200 tonnes (a decrease of 4.1%).
Concorde Capital’s analysis of the resolutions. from the country’s west. Iran is expected to As of December 1, 2021, these finished
The purpose of the market regulation is to receive 1.5 to 2bn cubic metres from Ashgabat products are stocked in the warehouses of the
stabilise the prices of socially important goods while it is expected to transfer the same Baku Oil Refinery (BNPZ): gasoline 36,300
and to fight the coronavirus (COVID-19), amount to Azerbaijan. The deal m may cause tonnes, naphtha 700 tonnes, jet fuel 16,600
according to the Cabinet. some disquiet in Washington. The US recently tonnes, diesel fuel 82,900 tonnes, heating
The Association of Gas Producers of reminded countries not to restart trade with oil 12,300 tonnes, lubricants 9,200 tonnes,
Ukraine (AGPU), an industry association Iran whilst sanctions remain in place. petroleum bitumen 19,100 tonnes, petroleum
of which DTEK Oil & Gas is a member, After the contract was signed in November, coke 7,700 tonnes.
said the resolutions are illegal and called on the Iranian oil ministry described it as a “step Currently, only one refinery is operating
the authorities to reconsider their decision, forward in energy ties” among the neighbours. in Azerbaijan - the Baku Oil Refinery named
according to an AGPU’s December 31 press Iranian Oil Minister Javad Owji added after Heydar Aliyev (part of the structure of
release. Ukrainian gas producers might be that the agreement helps Iran to ensure the the Socar company).
forced to defend their interests in the manner stability of its natural gas network and supply
prescribed by law, the AGPU said. energy to provinces including Khorasan
DTEK Oil & Gas’ pre-tax profit foregone Razavi, Golestan and Semnan where Iran’s German foreign minister:
because of the regulation might amount distribution network for its own gas is thin.
to $100mn, analysts at Concorde Capital “Turkmenistan will sell 5-6 million cubic Russia’s current actions
estimate. metres of gas per day to Azerbaijan under the
The company might have to sell up to trilateral agreement,” Iranian state TV quoted a “factor” in delaying NS2
140mn cubic metres of natural gas at the Owji as saying in November.
regulated prices, assuming it produces 700 Iran has the world’s second largest reserves certification
mcm in January-April. We expect DTEK Oil of natural gas after Russia, but most of its
& Gas to have produced about 2.05 bcm of major gas fields are located in its south, thus Russia’s massing of troops on the Ukraine
natural gas in 2021. Iran has traditionally brought in gas from border are “a factor” in the certification delay
Assuming the European prices of €75/ neighbouring Turkmenistan for distribution of the Kremlin’s Nord Stream 2 gas pipeline,
MWh, or $900 per trillion cubic metres, to its northern provinces. It is especially according to Germany’s new foreign minister,
DTEK Oil & Gas will earn about $700/tcm required during the winter. Annalena Baerbock. This marks the first time
less if it is forced to sell its gas at the regulated “The signed document is very important. a member of the German government has
rather than at market price, we calculate. This is a historical document, it shows directly connected the delay of the project’s
The Cabinet’s decision is marginally how deep the Azerbaijani-Iranian ties are. certification to the ongoing Ukraine crisis.
negative for DTEK Oil & Gas because it Azerbaijan will receive Turkmen gas via European gas futures skyrocketed 11% at
might result in a significant amount of profit Iran. This is good grounds for trilateral the news, and now stand almost 400% higher
foregone. Importantly, the decision also casts cooperation. The signed document is than the start of 2021.
a shadow on the prospects of investments into important from the point of view of economic On November 16, Germany’s federal
natural gas production in Ukraine in general. and energy security,” Azerbaijan’s President energy regulator suspended the certification
It is unclear whether Ukraine’s natural Ilham Aliyev said of the arrangement. of Nord Stream 2, which must occur before
gas producers, which DTEK Oil & Gas leads any gas can flow through the pipeline. The
with a 40% production share, will be able to regulator said that Nord Stream 2 AG, the
successfully overturn the Cabinet’s resolutions Socar increases production Russian-owned, Swiss-registered company
in the courts. responsible for the project, did not meet
In any case, the Cabinet’s decision should of gasoline by 7% and diesel German energy law and needed to register a
not affect DTEK Oil & Gas’ credit quality German subsidiary.
to any significant degree. The company by 19% Baerbock herself stated that “as things
should remain financially sound, earning stand at the moment, this pipeline can’t
on its natural gas sales in 4M22 about four Socar increased production of gasoline by be approved because it does not fulfil the
times more than the profit foregone due to 7%, diesel by 19% in January-November. The requirements of European energy law.”
the regulation. Furthermore, the natural gas production of oil products in Azerbaijan in Baerbock’s Green Party, who have
pricing situation in Ukraine is also expected to January-November compared to the same consistently opposed Nord Stream 2, are one
remain favourable for the remainder of 2022. period last year increased in monetary terms of the coalition partners in the new German
by 14.6%, up to $2.343bn, according to the government. The Free Democratic Party, a
State Statistics Committee. fellow coalition partner, also opposes the

Week 01 05•January•2022 www. NEWSBASE .com P13