Page 93 - RusRPTMay19

averaging 3.9mn tons annually -- most of Novatek's production is contracted by Asian consumers - will lead to annual losses of $1.3bn. The letter was seen as a response to one from the rector of St. Petersburg City University Vladimir Litvinenko arguing that an Arctic gas cluster could sustain LNG production of 140-150mn tons a year. 140-150mn tons of LNG exports a year would correspond to 190 bcm of piped gas exports, basically the entire volume Gazprom currently sells to European consumers.
Prime Minister Dmitry Medvedev signed an order imposing new sanctions against Ukraine, which include restrictions on the export of crude oil and oil products to the country, Vedomosti reported on April 19. According to the order, Russia is to stop the export of crude oil to Ukraine, while exports of oil products are to require the approval of the Ministry for Economic Development from 1 June, according to the paper. Kommersant reports that Rosneft and Lukoil are the key oil product suppliers to Ukraine. Russian oil companies supplied some 2.5mmt of diesel and 0.4mmt of naphtha last year to Ukraine, while no crude volumes were supplied. “The banning the export of crude oil and oil products to Ukraine might have a slight negative effect on the logistics, and potentially on the margins, of these supplies as Ukraine could well purchase these products from adjacent countries. However, the effect on Russian oil companies is likely to be negligible,” VTB Capital (VTBC) said in a note.
Fitch Ratings sees 2019 oil prices averaging around $65 per barrel, falling to $62.50 in 2020 and $57.50 by 2022. A faltering global economy may start eating into demand for oil as early as this year, pushing prices lower, Fitch Ratings’ senior director Dmitry Marinchenko told Reuters in an interview. He said that the rating agency expects global economic growth to slow to 2.8% in 2019-2020 from 3.2% in 2018.
Russia’s exports of liquefied natural gas (LNG) fell 31.3% on the month to 3.7mn cubic meters in February with revenue decreasing 8.4% to US $687.7mn, the Federal Customs Service said in a statement on Monday. Exports of natural gas rose 10.3% to 20.2bn cubic meters with revenue growing 5.7% to $4.712bn. In January–February, LNG exports grew 81% on the year to 9.1mn cubic meters with revenues more than doubling to $1.438bn. Natural gas exports went down 2.7% to 38.5bn cubic meters worth $9.173bn, a rise of 14.9%. In 2018, exports of LNG jumped 50.4% on the year to 36.7mn cubic meters and of natural gas rose 4.9% on the year to 220.6bn cubic meters.
Russia's natural gas giant Gazprom estimated that 65% of the liquefied natural gas (LNG) produced at the Yamal LNG of private gas producer Novatek was exported to Europe, leading to about $440mn losses to the state budget in the form of unpaid export duties on pipeline gas supplies from Gazprom, Interfax reported citing a letter of deputy head of Gazprom Vitaly Markelov. The report could mean that Gazprom will try to use its state monopoly status to clip Novatek's wings, which has become an investors’ darling and almost caught up with state majors in terms of capitalisation after adopting and successfully carrying out an ambitious LNG strategy. Markelov reportedly claims that in December 2018 when Yamal LNG of Novatek reached its full capacity, the sales of Gazprom to Europe declined by 13%.As noted by bne IntelliNews, recent reports suggested Novatek could be becoming Kremlin's new favourite, which could alarm Gazprom. The company could be the first private hydrocarbon major to be allowed to extract on Russian strategic sea shelf. Last month Novatek was also allowed to transport
93 RUSSIA Country Report May 2019 www.intellinews.com