Page 46 - Russia OUTLOOK 2022

VTB Capital analysts believe that providing Rosneft with gas export rights would mostly be negative for Gazprom, in terms of both sentiment and finances.
Gazprom to increase daily exports to China in 2022 – in line with the contract schedule. Gazprom is preparing for the planned increase in gas supplies to China next year and noted an increase in daily supplies in November and December in relation to the planned volumes, according to Kommersant, with reference to a Gazprom statement. For most of 2021, Gazprom supplied over 28mmcm/d to China. In 2022, we expect Gazprom to supply about 15.3bcm of gas, so the increase in gas supplies to China is already included in our forecast. This year, we anticipate Gazprom supplying more than 10bcm of gas to China (in 9mo21, it supplied 7.1bcm to China). All in all, this is supportive for the company, but we treat the news as not market-moving. To recap, Gazprom has a 30-year take-or-pay contract with CNPC for the delivery of natural gas through the existing Power of Siberia pipeline, with long-term annual deliveries of 38bcm/a.
German Foreign Minister Annalena Baerbock told German broadcaster ZDF on December 12 that Russia’s current hostile actions towards Ukraine are “a factor” in the certification delay of the Kremlin’s Nord Stream 2 gas pipeline -- the first time a member of the German government has explicitly linked the delay of the project’s certification to the crisis between Russia and Ukraine.
The pipeline was due to be cleared for use in January or February, but following the flare-up that began in October the pipeline got caught up in the crossfire and the approval process was suspended on November 16. It is now not expected to be completed until the summer at least and maybe even longer.
The regulator said that Nord Stream 2 AG, the Russian-owned, Swiss-registered company responsible for the project, did not meet German energy law and needed to register a German subsidiary. For its part the Kremlin is moving forward to end Gazprom’s monopoly on exports of gas and may approve Rosneft to export up to 10bcm of gas via Nord Stream 2 as the EU law requires competitive access to the pipeline.
Baerbock told ZDF that the three coalition parties forming the new German government agreed that “as things stand at the moment, this pipeline can’t be approved because it does not fulfil the requirements of European energy law.”
Germany has had a new centre-left coalition government led by Social Democrat Chancellor Olaf Scholz since December 8, after the culmination of Angela Merkel’s 16 years at the country’s helm.
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