Page 7 - EurOil Week 25
P. 7
EurOil COMMENTARY EurOil
delayed the o ering a er investors demanded too high a return.
Differing stances
Russia and Ukraine still have some way to go before reaching a compromise in the contract talks. Moscow wants to extend the existing tran- sit agreement for a short- or medium-term, pre- sumably to allow it to slash volumes once Nord Stream 2 begins pumping gas. On the other hand, Kyiv is looking to agree a new contract guaranteeing the supply of at least 60 bcm per year of Russian gas over a 10-year period. e European Commission too is pressing Russia for a guarantee that a “substantial” volume of gas will continue owing through Ukraine.
Na ogaz has recently even suggested a swap arrangement, whereby Gazprom would sell its gas to the company at the Russia-Ukraine border, with Kyiv then transferring the same amount at its border with the EU. Neither Mos- cow nor Brussels is likely to back such a proposal, however, as it would give Ukraine too much con- trol over the bloc’s gas supply security.
Further complicating talks, Gazprom Export head Elena Burmistrova was cited by Platts in a recent press brie ng as saying that the Russian group was unclear on who it should be negoti- ating with on the Ukrainian side, amid ongoing reforms in the country’s gas sector.
Na ogaz is due to spin o its transit division, transferring control to a newly set up operator called MGU. Gazprom has said previously it will not negotiate a new transit contract until the unbundling is complete and MGU is given responsibility for operating the country’s gas grid. But the Ukrainian government insists that Gazprom deal with Na ogaz, and has temporar- ily transferred managerial control of MGU from the energy ministry to Na ogaz until the start of 2020.
A breakthrough is unlikely until, at the very earliest, the next round of trilateral talks between Russia, Ukraine and the EU tentatively scheduled for the second half of September. Until then, Ukraine’s future as a transit route and Europe’s gas supply security hangs in the balance.
PIPELINES & TRANSPORT
Enel, Sonatrach pen new gas supply deal
ITALY
ITALY’S Enel will continue relying on Algeria’s Sonatrach for its gas supplies until at least 2028, under a contract extension signed by the pair this week.
In an online notice, the energy giant said it had opted to renew its import agreement with Sonatrach that had been due to expire at the end of 2019 for another eight years. e deal includes an option for a further two-year extension until 2030, it said.
Enel has been buying gas from Sonatach since the late 1990s, which it receives via the 33 billion cubic metre per year Transmed pipeline under the Mediterranean. e pair’s previous contract was for 6 billion cubic metres (bcm) of gas per year, although neither company has disclosed volumes under the new agreement. According to earlier statements by Enel, how- ever, it will cover almost 15% of Italy’s total gas intake. Italian imported 64 bcm last year, implying an annual supply from Sonatrach of 9.6 bcm.
Sonatrach has struck similar deals with
several long-time customers in recent months, as it looks to protect its share of the increasingly competitive European gas market. It secured a deal to annually deliver 2.5 bcm of gas to Portu- guese gas utility Galp earlier this month, follow- ing on from an agreement in May with Italian oil and gas group Eni for supplies up until 2027, with a possible extension to 2029.
Sonatrach’s other major Italian buyer is Edi- son. e company accounts for around a quarter of Italy’s overall imports, while Russia’s state- owned Gazprom commands a larger share of 35-40%. is mix is set to change following the 2020 launch of gas supplies from Azerbaijan via the Southern Gas Corridor (SGC) – a network of pipelines spanning across the South Caucasus, Turkey and southern Europe that terminate in Italy.
Italian buyers are set to receive around 8 bcm of gas from SGC. Gazprom is also hoping to expand sales to the country using the Turk- Stream pipeline under the Black Sea, slated to start up in 2020-2021.
Week 25 27•June•2019 w w w . N E W S B A S E . c o m P7
