Page 5 - GLNG Week 02 2023

GLNG COMMENTARY GLNG

Europe’s biggest USG tanks, managed to reverse from earlier forecasts of 2% to around 3% of
the withdrawals over the holidays and has been GDP in 2023, but MinFin says it can cover that
adding to them for the last few weeks, bringing with increased borrowing from the domestic
the total up to just over 90% full at the end of the bond market, where it is expecting to issue some
second week of January. RUB3.5 trillion ($51bn) of OFZ ruble bonds in
2023, tapping the National Welfare Fund (NWF)
Russian budget to cope for now and special taxes on Russia’s biggest state-owned
The falling gas prices have been matched by the enterprises. The budget was kept in surplus in
ballooning discount on oil export prices follow- November thanks to a special circa RUB450bn
ing the imposition of the oil price cap scheme* tax payment by Gazprom and the government
on December 5, which has blown out to 50% has already floated measures to introduce similar
against the benchmark Brent blend of oil. special taxes on other sectors and companies.
However, the Kremlin says that the collapse
in the export price of its Urals blend is tempo- Do the gas maths
rary and due to “increased logistics costs” as What happens next? To understand how the rest
Russia’s crude exports can no longer go to nearby of the year could play out you have to do some
Europe, but must be sent half way around the gas maths.
world to customers in Asia. Is the gas left in the tanks enough to get
It remains unclear what affect the fall in prices through the next winter too? That could be a
will have on Russia’s budget this year. The Min- problem. Analysts have been saying since the
istry of Finance (MinFin) just reported that the start of the crisis last year that the difficult year
federal budget deficit for 2022 came in at 2.3% of was not going to be 2022, which was bad enough,
GDP (or 1.8% if special spending is counted out, but the winter of 2023.
according to Russian Finance Minister Anton Europe typically requires around 470 bcm of
Siluanov), which is more or less in line with the gas a year, which accounts for almost a quarter
target set by MinFin in the early months of the (22%) of its total energy consumption, of which
war. between 30-40% used to come from Russia.
The current account surplus is set to fall from But the Russian share in the energy mix
the extraordinary $270bn surplus achieved last has just dropped dramatically. In 2021 the EU
year – more than double the previous all-time imported 155 bcm of gas from Russia, which fell
high of $120bn set in 2021 – but despite an to 100 bcm in 2022. However, remember that
expected reduction, the surplus this year is still Russia was sending the EU gas as normal for
expected to come in at around $100bn, accord- the first half of last year. It was only in July that
ing to Elina Ribakova, deputy chief economists Gazprom started having “technical difficulties”
at Institute of International Finance (IIF), thanks before gas flows dropped off to next to nothing
to continued elevated commodity prices due to after explosions destroyed the two main Nord
the war. Stream gas pipelines on September 26. This year
The deficit this year is predicted to expand analysts are expecting gas flows to halve again

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