Page 119 - RusRPTNov21

Novatek’s Arctic LNG 2 and LNG 1, as well as the Obsky gas chemical project and Gazprom’s Kharasavey field (to be launched in 2023). Gazprom Neft would also be affected, through its new planned projects: the development of oil rims as well as the Achimov formations at the parent company’s fields, we think.
In general, we note that for Gazprom, a major part of its production originates in the Arctic (at, for example, the c. 100bcm Bovanenkovo field), which might result in further spikes in gas prices globally and in Europe, in particular.
Overall, we treat the news as neutral at this point and think that this scenario is impossible to implement in the near future. However, if this development expands, we believe that the aforementioned O&G shares might see some pressure from institutional investors’ approach to their stock investment decisions on the back of the ongoing increase in climate-related practices.
Gazprom starts to fill first line of Nord Stream 2. The gas-in procedure for the first line of Nord Stream 2 started 4 October, according to a press release from Nord Stream 2 AG. The line is being filled to build pressure and inventory levels for further technical tests. The first line has already undergone pre-commissioning work. According to the release, “the pipeline is built and independently certified according to applicable technical and industrial standards.” Kommersant reported that Nord Stream 2 AG is not commenting on who certified the pipeline. The pipeline still needs certification as an independent operator, which could take up to four months. The German Federal Network Agency Bundesnetzagentur requested information and potentially evidence that all regulatory requirements are being met, Reuters reported. Specifically, the agency needs to know whether Nord Stream 2 will provide non-discriminatory access under EU law and that the infrastructure will be integrated in the German market, according to Bloomberg. Denmark said Nord Stream 2’s pipeline B meets these requirements and can become operational, Bloomberg reported, quoting the Danish Energy Agency.
European coal rose to $234/ton at the start of October reports Vedomosti.
Gas is still far, far more expensive, but other fuels are responding: Gas prices remained around $1,100/mcm ($30.8/mcf) on October 1 in Europe, levels that are not only all-time records, but several times higher than the price of oil (125%) and coal (210%) on an energy-equivalent basis (see chart). Despite the super-high gas prices, the fuel remains competitive on, for example, German power markets due to record-high prices for electricity, which are keeping mid-day (peaking) ‘spark spreads’ (the margin earned for generating gas from electricity) positive. In short, the demand for coal is responding to the shortage of gas in the market, and prices may have only begun to rise. Meanwhile, it appears the gas market is having trouble finding enough marginal buyers to push into alternative fuels – or to cease activity altogether.
119 RUSSIA Country Report November 2021 www.intellinews.com