Page 11 - FSUOGM Week 27

FSUOGM PIPELINES & TRANSPORT FSUOGM

Russia’s Gazprom closes

major pipe tender

RUSSIA RUSSIAN natural gas giant Gazprom com- company’s LDP shipments in 2021-2022, VTBC
pleted a major RUB96bn ($1.35bn) tender for estimates. With 3% of 2021-2022 revenues, or
The pipes are being large diameter pipes (LDP), which was expected RUB14.7bn, coming in from the Gazprom deal,
ordered for Power to support the pipemaking and steel indus- the news is seen as positive for TMK and other
of Siberia and other try. According to Interfax, OMK is to become pipe producers.
projects in northwest the largest supplier, with 35% of all volumes, Gazprom’s order “lifts the uncertainty over
Russia. followed by Severstal’s ITZ (25%), TMK and the medium-term prospects for the LDP indus-
Chelpipe (15% each) and ZTZ (10%). try, which is quite volatile and depends on large
“This is Gazprom’s largest purchase of LDP, infrastructure projects,” VTBC believes.
and the first conducted through a competitive As reported by bne IntelliNews, in the sec-
tender, with both factors possibly being driven ond half of 2019 the company, along with other
by the company’s intention to save costs,” VTB steel majors, was hit by lower prices, but also
Capital (VTBC) commented on July 7. faced competitive challenges domestically. But
The final purchase price makes up 3% of Gaz- in 4Q19 TMK beat expectations on its top line
prom’s 2021-2022 forecasted capital investment, and got a $1bn cash boost from finally closing
VTBC estimates. the sale of its US subsidiary IPSCO Tubulars.
The pipes are being ordered for the construc- In April shares of TMK rallied on its buyback
tion of Power of Siberia loopings, as well as the and delisting from the London Stock Exchange
Bovanenkovo-Ukhta and Ukhta-Torzhok trunk (LSE). Still, the “company’s capitalisation contin-
pipelines, and could account for almost a third ues to face pressure due to various market factors
of total LDP consumption in Russia in 2021-22. and low liquidity of the company’s equity secu-
TMK’s share (15%) translates into 0.192mn rities,” TMK said in a statement, explaining its
tonnes of LDP, which accounts for 30% of the decision to delist in London. ™

Gazprom books 90% of Yamal-

Europe capacity in Poland

RUSSIA RUSSIA’S Gazprom has booked around 90%, the Russian supplier redirecting transit volumes
or 25.7bn cubic metres, of the westward transit away from Ukraine.
Russia and Poland's capacity of the Polish section of the Yamal-Eu- Under the new ship-or-pay contract between
long-term transit rope pipeline in the year starting October 2020, Ukraine and Russia, Gazprom only has to pay
contract expired in Poland’s gas grid operator Gaz-System has to send 65 bcm of gas to its customers using
May, and since then reported. Ukraine's pipelines, falling to 40 bcm annually
Gaz-System has been Russian gas flows through Poland were halted between 2021 and 2024.
oferring Yamal-Europe's in late May after the expiry of a gas transit deal The remaining 10% of Yamal-Europe’s capac-
capacity in auctions. between the two countries dating back to the ity through Poland will likely be auctioned on a
1990s. Poland is aligning its energy regulations short-term basis, Russia’s Kommersant reported.
with EU rules, which require operators to auc- The tariff at the entry point to Poland is set at
tion off access to pipeline capacity and forbid $3.50 per 1,000 cubic metres, the newspaper
companies from having exclusive rights to that said. Assuming the exit tariff at the German bor-
capacity. der is the same, this will bring Gazprom’s overall
The rules allow legacy contracts such as the transit cost through Poland to $7 per 1,000 cubic
transit agreement between Poland and Rus- metres.
sia to continue, but block their renewal. Since Yamal-Europe carries gas produced in
then Gaz-System has been holding the required Western Siberia all the way from Torzhok,
auctions. running for a total length of 2,000 km. The
“Booking 90% of capacity might partially Polish section of the pipeline is owned by
reflect Gazprom’s expectations of European gas EuRoPol GAZ, a joint venture between
demand recovering to historic levels in 2021,” Gazprom and Poland’s PGNiG, although
VTB Capital (VTBC) wrote in a note on July 7. Gaz-System serves as its operator, managing
But it cautioned that it could also be explained by its capacity. ™

Week 27 08•July•2020 www. NEWSBASE .com P11