Page 95 - RUSRptApr17

9.0 Industry & Sectors 9.1.1 Oil & gas sector news
Russia’s largest natural gas producer Gazprom closed a €4.75bn financing deal for the construction of the Nord Stream 2 pipeline with five European companies, the state-controlled pipeline exports monopolist said in a statement on April 24. The €4.75bn deal that secures 50% of the project’s cost was closed with Britain’s Shell and Engie, Germany’s Uniper and Wintershall, and OMV of Austria each providing €0.95bn. The deal can deliver much-needed relief on Gazprom’s massive investment programme, one of the main strains on the company. Gazprom, which still has to self-finance the remaining €4.75bn for Nord Stream 2, will in 2017 alone have to invest RUB111bn (€1.8bn) in the project, while foreign co-investors will provide €285mn. Notably, Gazprom will remain the only shareholder of the Nord Stream 2 project, a second thread of the Nord Stream pipeline connecting Russia with Western Europe via the Baltic Sea, as the five companies involved could not secure equity shares “for political reasons”, according to Kommersant daily.
Russia’s natural gas pipeline exports monopolist Gazprom will cut the transit of gas through Ukraine almost six-fold after the second strand of the Nord Stream pipeline is completed, Gazprom CEO Alexei Miller told Reuters on April 25. The remarks came as Gazprom announced a major boost to the North Stream-2 project through securing 50% of its estimated cost from five European energy utility majors. Nord Stream 2, along with the extended Turkish Stream pipeline, aims to deliver Russian gas to Europe bypassing Ukraine. The gas transit system of Ukraine has the capacity of 120bcm annually, but the transit of Russian gas was cut significantly to 50-80bcm since 2014 as relations between the countries plummeted, yielding about $2bn revenues for Ukrainian economy. With the commissioning of Nord Stream 2 and the expiration of current transit agreements in 2019, the transit could be cut even further, Miller said.
Russia contributed to the OPEC cuts deal 300,000 bpd, but has yet to state publicly whether it wants cuts to run beyond June , although Moscow was represented on a panel monitoring the pact that on April 21 recommended an extension. Russian officials have also indicated that local oil companies were ready to push up output once the pact runs out. Energy Minister Alexander Novak told Reuters in March that output could reach 548 mn-551mn tonnes a year in 2017, equivalent to 11.01 mn-11.07mn bpd, the highest average since 1987. In 2016, Russia produced about 547.5mn tonnes, or an average of 10.96mn bpd. Under the deal with OPEC, Russia was to cut production to 10.947mn bpd from 11.247mn bpd, the level achieved in October 2016 that was the highest in the post-Soviet era.
Russia cut its average daily oil production by 1.6% from 1,527,500 tonnes to 1,502,400 tonnes as of mid-April under the output reduction deal reached with Opec last year , the Central Dispatching Department of Fuel Energy Complex reported on April 17. Compared with the output level of October 2016, Russia's production decreased by 1.6%. By the end of March, production had been cut by 1.2% and by 0.8% in late February. Under the agreement with the cartel of oil-producing states reached in late November,
95 RUSSIA Country Report April 2017 www.intellinews.com