Page 8 - FSUOGM Week 36 2022

FSUOGM COMMENTARY FSUOGM

including those based on sanctions, we've opti- straight-run gasoline to $28.6/tonne ($29.1) and
mised oil refining at two oil refineries of ours in on commercial gasoline, diesel fuel, light and
order to meet needs of the domestic market.” middle distillates, benzene, toluene, zylene and
On August 30, an official from the state- lubricants to $15.6/tonne ($15.9).
owned Belarusneft company told state Belaru- Considering the fact that Russia has more
sian media that Belarus was planning to extract than enough of its own oil products, the halv-
1.8mn tonnes of oil in 2022, an increase of 70,000 ing of the Belarusian refineries' throughput and
tonnes from last year. According to the official, Yuri Nazarov’s statement in April, this decision
this was a part of the gradual increase in extrac- is interesting.
tion volumes that had been going on for the It suggests that Belarus could be counting on
past six years, which also “produces virtually no finding a new market to offset its oil products
waste.” (such as the Russian market) relatively soon and
One day later, Belarus reduced its export is therefore increasing production early while
duties on oil and oil products in accordance with planning to start up its refineries later. It could
a resolution adopted by its Council of Ministers. also be the case that this output increase is merely
The resolution lowered the export duties on for show, and the produced oil could be stored
crude oil, furnace oil, oil bitumen, petroleum for a longer time, awaiting a more favourable
jelly, paraffin and waste oils to $52/tonne ($53), export climate. ™

PIPELINES & TRANSPORT

Novatek eyes Shell’s stake in

Sakhalin-2 LNG project

RUSSIA RUSSIA’S second-largest gas producer Novatek the government’s criteria for any potential pur-
is considering buying Shell's 27.5% stake in chaser in Sakhalin-2, such as having experience
Shell is looking to Sakhalin-2 liquefied natural gas (LNG) project, in large-tonnage LNG production of over 4mn
withdraw from the Kommersant daily and RBC business portal tonnes annually, accumulated production and
project and leave all its reported citing the CEO and shareholder of trading volumes of at least 40mn tonnes, and
other Russian assets. Novatek, Leonid Mikhelson. valid time charter agreements for LNG carriers.
To remind, amid the exodus of foreign energy “Novatek may expand its net LNG capacity
companies from Russia caused by the military by c35%, being apparently the only qualified
invasion of Ukraine, Russian President Vladimir buyer for Shell’s stake in Sakhalin-2. Price will
Putin signed a decree on June 30 that transferred determine the success of any deal, but this is a
all rights and obligations of Sakhalin-2 to a new significant opportunity for Novatek,” BCS GM
Russian entity. analysts believe.
This effectively gave the Kremlin the power Japan’s Mitsui (12.5%) and Mitsubishi (10%)
to nationalise foreigners’ stakes in what is one of have already elected to remain on-board, while
the largest, oldest and most successful interna- Gazprom will remain the controlling share-
tional projects in the Russian oil and gas indus- holder with 50%. Running a joint venture with
try. After a Kremlin-ordered conversion of its Gazprom could be seen as one of the downsides
holding structure to onshore Russia, Shell chose for Novatek, BCS GM believes.
not to retain its share in Sakhalin-2. But “in any event, the size of the project
Now Novatek is considering buying Shell’s means Novatek must at least take a close look
stake in the project, which has an annual capac- at the opportunity”, BCS GM argues, remind-
ity of 11.5mn tonnes of LNG, but only after a ing that Novatek currently has a 50% stake in
thorough due diligence, according to Mikhelson. the 17.5mn tonnes Yamal LNG project, as well
Previously Novatek bought a 49% stake in as 51% in the 0.66mn tonnes Cryogas-Vysotsk
its Terneftegaz joint venture with TotalEnergies small-scale LNG plant, for a total of 9.1mn
from its French partner, bringing its ownership tonnes per year of capacity.
to 100%. Adding a net 3.2mn tpy from Sakhalin-2
BCS Global Markets notes on September 8 would increase the company’s net LNG output
that Novatek is the only company that can meet by 35%, BCS GM estimates. ™

P8 www. NEWSBASE .com Week 36 09•September•2022