Page 9 - FSUOGM Week 09 2022

FSUOGM PERFORMANCE FSUOGM

Russia ramps up gas supply via

Ukraine despite invasion

RUSSIA RUSSIAN gas flow through Ukraine has surged At issue is Gazprom’s sales under month-forward
in recent days, in spite of Russia’s all-out invasion hub pricing, which probably account for 40-45%
The increase was of its western neighbour. of the overall export contract portfolio.”
triggered by a spike in Russian supplies through the country rose by For example, those contracts fixed the price
gas prices at European nearly 75% on February 24, the day that Moscow of gas in January at the average month-forward
hubs. launched its attack, according to data published hub price in December. So in January, the price
by ENTSOG. This followed a growth of 40% on under these contracts was fixed at $1,350 per
the day before. 1,000 cubic metres, even as spot prices fell to a
The increase was triggered by a spike in gas still-high $990 per 1,000 cubic metres. Then in
prices at European hubs and a sharp growth in February, the contract price came down to $990
demand for Russian gas. The March contract per 1,000 cubic metres, but the spot and day-
at the Dutch TTF hub soared almost 50% on ahead prices averaged around $895 per 1,000
February 24, exceeding €134 ($151) per MWh. cubic metres.
However, it subsided by around 30% on the fol- “All of that changed on February 23 as
lowing day. European gas prices began to climb late in the
Analysts at BCS Global Markets (BCS GM) day before jumping to $1,400 per 1,000 cubic
note that Gazprom’s month-forward contracts metres on February 24,” BCS GM said. “Flows
have been uncompetitive so far this year, and to Europe via Ukraine rose 40% from a very
Russian exports to Europe have been low. low 27mn cubic metres per day on February 22
“The reason was purely commercial,” BCS to 38 mcm per day on February 23, then rose
GM said, commenting on previously low flows. another 75% to 66 mcm per day in the court
“Although Gazprom was fully meeting client of February 24,” BCS GM said. “Volumes are
nominations for volumes under its long-term still well below the typical 109 mcm per day
contracts, those requests had fallen sharply for we would expect via Ukraine, but are clearly
quite a simple reason – the price was too high. headed in that direction.” ™

PROJECTS & COMPANIES

OMV axes Siberian gas

acquisition

UKRAINE AUSTRIAN oil firm OMV will axe a plan to buy while Germany’s Wintershall Dea has 25%. The
into two Achimov-layer gas blocks in Western partners brought 4A into production in January
The deal has been Siberia, and is also reconsidering its involvement 2021, followed by 5A in April of that year.
under discussion for in Russia’s Nord Stream 2 pipeline project, the OMV made no mention of an intent to divest
years. company said on March 1. its existing business in Russia, which namely
In a terse statement, the company did not give comprises a 25% holding in Gazprom’s Yuzh-
a reason for ending plans to buy into Gazprom’s no-Russkoye gas field, which feeds into the orig-
Achimov 4A and 5A blocks at the Urengoi gas inal Nord Stream pipeline to Germany. OMV
field. But the decision comes after many of its nets 100,000 barrels of oil equivalent per day
peers in the European oil and gas industry have (boepd) from the asset.
similarly scaled back in Russia in response to OMV is one of five European backers of
Moscow’s invasion of Ukraine. BP, Equinor and Gazprom’s Nord Stream 2 pipeline, which while
Shell plan to leave altogether, while TotalEner- complete, is yet to flow any gas, as its certification
gies will retain from any new investments in the process has not been finished. German Chancel-
country. lor Olaf Scholz announced last week his govern-
OMV has been in talks to acquire 25% stakes ment would halt that process, and since then the
in 4A and 5A for a number of years, and in Swiss-based Nord Stream 2 operating company
2019 it reached a preliminary agreement to pay has entered insolvency proceedings.
€905mn ($1.01bn) to Gazprom for the inter- OMV lent Gazprom €730mn ($814mn) for
ests. Gazprom has a 75% interest in the blocks, the project, whose total cost is $11bn. ™

Week 09 02•March•2022 www. NEWSBASE .com P9