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through the Ukrainian gas transit system reached its lowest level since 1991 and amounted to only 1.25 billion cubic meters. In May 2022, the volume of transit through Ukraine fell by 37% compared to June of the previous year. Gazprom used only 38% of the reserved capacities under its long-term contract. Gazprom continues not to use the paid, reserved capacity at the Suzh entry point, which is 77.2 million cubic meters per day. The Russian company did not take an opportunity to transfer gas using Sokhranovka GIS capacities and did not participate in capacity reservation auctions, said the Gas Transit Operator of Ukraine.
The EU has imported more gas by sea from the US than through pipelines from Russia. In June 2022, the EU received more natural gas by sea from the United States than through pipelines from Russia for the first time, announced the International Energy Agency. IEA executive, Fatih Berol, added that this trend signals the need for the EU to reduce consumption and prepare for a brutal winter. Last week, The European Commission stated that they expect severe interruptions in the supply of Russian gas and will intensify preparations for such scenarios. The German government admits that Russia may not resume the natural gas supply to Europe via the Nord Stream-1 gas pipeline after the repair work planned for next month.
MinFin supports the idea of requiring ruble payments for LNG from ‘unfriendly’ countries, stated Russia’s Minister of Finance Anton Siluanov in an interview with Vedomosti. This would affect both Gazprom’s Sakhalin-2 project and Novatek’s Yamal LNG project. Gazprom has proposed just such a move since the imposition of the “rubles for gas” on pipeline supplies to Europe, with the company’s position being that not requiring it for LNG gives that fuel an unfair advantage over pipeline deliveries to Europe.
This would affect Novatek more than Gazprom. Gazprom’s Sakhalin-2 project sells directly into the Asian market, which accounts for 65-75% of global LNG purchases in most years, and where many major buyers (China, India) are considered ‘friendly’ to Russia, and thus its sales would only be marginally affected. Novatek’s Yamal LNG, on the other hand, ships to both Europe and Asia and, although its ice-class tankers are capable of making their way to Asia almost year-round, the passage along the Northern Sea Route becomes much slower and more expensive when in ice-breaking mode. The alternative of sending LNG first west then around Europe, through the Suez Canal and thus to Asia is also much more expensive than just sending it to Europe. Thus, while we would not expect Novatek to have issues fully selling Yamal LNG’s production, we would expect profit margins to decline somewhat with the imposition of such a rule.
129 RUSSIA Country Report October 2020 www.intellinews.com