Page 83 - RusRPTJul19

9.0 Industry & Sectors 9.1 Sector news
9.1.1 Oil & gas sector news
Russian gas monopoly Gazprom said the company is developing the northern gas transmission corridor in Russian territory, which will feed gas into Nord Stream 2 pipeline, Novoe Vremya reported. The gas giant said that Nord Stream-2, a construction project for a gas pipeline with the annual capacity of 55bn cubic metres from Russia to Germany across the Baltic Sea, is 59% finished.
Russia’s top gas producer Gazprom expects the trend of growing gas demand in Europe to persist and the demand for extra imports to exceed the projected 150 bln cubic meters per year by 2035, Chief Executive Officer Aleksei Miller said at the annual shareholders meeting on June 28.
Ukrainian gas transit operator Naftogaz has suggested that it might sign a ten-year swap agreement with Gazprom for gas transit of 60bcm/a through Ukraine starting from 2020, Kommersant reports. The swap contract structure implies that Naftogaz purchases gas from Gazprom at Ukraine’s eastern border and sells it to Gazprom at the western border having withheld a transit margin. The suggested contract structure is required for Naftogaz to bypass EU ownership unbundling restrictions, according to the paper.
Separately, Vedomosti reports that Gazprom plans to fill 11.4bcm of natural gas in European underground gas storages in 2019, or up 73% y/y, to guarantee supplies to Europe in 1Q20, even if there are potential transit issues with Ukraine.
Gazprom is unlikely to agree with the terms suggested by the Ukrainian side, given that the company has previously indicated its plans to reduce gas transit through Ukraine following the launch of the Nord Stream 2 and TurkStream pipelines. Underground gas storages in the EU are now 67.1% full, or 15.5pp above the five-year average, which has probably been driven by the uncertainty over gas supplies starting from January 2020, when the gas transit contract with Ukraine expires, as well as by low gas prices.
Total output of OPEC members fell below 30mbbld to 29.9mbbld in May for the first time since 2010, due to a decline in output from Iran, Saudi Arabia, Nigeria and Venezuela, according to an OPEC report. Two oil tankers belonging to the Bermudian company Frontline and Singaporean Kokuka Courageous were damaged by an explosion near Iranian shores, according to RBC. Crews of both ships were evacuated, no one was injured. It is unknown who was responsible for the attack. US Secretary of State Mike Pompeo said Iran was responsible, while Iranian Minister of Foreign Affairs Dzavad Zarif said the US accusations were groundless.
CDU TEK published its oil and gas production data for May. Total Russian output was down 1.1% m/m to 11.1mmb/d, driven by the production cuts under the OPEC+ agreement. The highest production cuts were printed by Rosneft (- 2.9% m/m) and Surgutneftegas (-2.8% m/m), while Bashneft’s crude
83 RUSSIA Country Report July 2019 www.intellinews.com