Page 118 - RusRPTNov21

9.562mn barrels per day. Russia’s oil processing rose by 5.4% on the month to 5.985mn barrels per day in August.
The record level for Gazprom’s shipments to Europe, 200.7bcm, was recorded in 2018. For this year, we conservatively expect Gazprom to ship in excess of 190bcm. Higher gas export volumes (+5% vs. us) would support EBITDA at $4bn in 2021, or 7% under the recent futures curve, we calculate. The company itself guided for 183bcm under the long-term contracts in September.
Rosneft has previously suggested exporting 10bcm/a of gas to Europe through an agency agreement with Gazprom. We calculate that for Gazprom, the loss of 10bcm of export volumes in 2022 and 2023 might result in EBITDA declines of $1.5bn (3.6%) and $1.2bn (3.3%), respectively. We note, however, that no details (such as the commission amount, marketing conditions or transport tariffs) have been disclosed. Thus, the final effect on Gazprom’s financials might be slightly softer, we believe. Also, the company suggested amendments to the gas MET formula.
Rosneft does not have gas available for export at present; however, in 2022-23, the ramp-up of Rospan and the launch of Kharampur might result in 10bcm and 15bcm of additional gas production, respectively, according to the company. It is unclear to us whether this development might help to utilise the NS 2 pipeline in full, as this is a legal question.
To recap, the threshold amount of gas under the agreement with Ukraine is 40bcm/a. Gazprom booked some insignificant additional capacity through the country in 2021 at the monthly auctions. However, new pipelines (Nord Stream, TurkStream’s European leg) are more cost efficient for Gazprom, with the transit cost for Nord Stream at around half of that for legacy pipelines.
The European Commission has unveiled the EU's Arctic strategy, in which it said it would seek a global ban on oil, coal and gas production in the Arctic, according to Kommersant.
The strategy envisages that the EU is a valid party in all discussions concerning the Arctic, despite the fact that it is not a member or an observer in the Arctic Council (the inter-governmental organisation consisting of countries which have territories in the Arctic region). The EU will continue to seek observer status in the Arctic Council, but it has announced that it sees itself as a major actor in the region.
It is unclear how the EU might act to achieve a ban on hydrocarbon production. Were one to be implemented, many Russian O&G companies would be affected. If this initiative did materialise, among the largest would be Rosneft’s Vostok Oil project, with 30mnt of production guided by 2024. Among other new projects, we highlight
118 RUSSIA Country Report November 2021 www.intellinews.com