GAZPROM WILL ELIMINATE
According to NATURAL GAS EUROPE, Gazprom is preparing to largely decommission its central gas export pipeline system that feeds Ukraine, Slovakia and central Europe at the end of the decade as it brings on Nord Stream 2.
CEO Alexei Miller told the St Petersburg Economic Forum June 16 that the export monopoly would reduce its working capacity to no more than 15bn m³/yr, saving $1.6bn by 2020.
"For us it is a principal issue. Gazprom has launched a programme to optimise expenses in the central corridor which now has free capacities which also cost us money. We will hence liquidate 4,300 km of pipes and close 62 compressor stations... This means that by 2020 the transit capacities left in the direction of Ukraine will be 10-15bn m³/yr," he said. "There were some suggestions to leave 30bn m³/yr of transit in Ukraine; we calculated that it will cost us $25-43bn over 25 years. Who will compensate us for these extra expenses? This approach will also equal extra 112mn tons of CO2."
He also introduced an argument not much aired in Europe: he pointed out that Russia's production base was moving further north, to Yamal – home of the supergiant Bovanenkovo field. "Yamal is our key new resource base – actually it is becoming our main supply base. Therefore everything is moving northwards and we must adjust our strategies in terms of exports and domestic flows," he said. This would entail a new and more efficient transport system.
Running offshore, "it is the shortest and straightest export route from our Yamal resource base to our key markets of demand." The Ukraine corridor is 2,000 km or 1.5 times longer, and it is more expensive per unit per distance. It is also better for the environment, it says. It operates at higher pressure and does not entail high maintenance costs.
The costs of delivering gas to Germany will be 1.6 times is lower via Nord Stream compared with Ukraine, he said. With the Nord Stream 2 projected volumes and using this fee, Gazprom can earn $7bn in dividends in the next 25 years and provide its European shareholders dividends of $7.3bn.
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BLOOMBERG - While Europe as a whole gets more than a third of its gas from Russia, that share is lower in the U.K., which receives the bulk of its fuel from North Sea fields and Norway. Still, Moscow-based Gazprom PJSC was the second-biggest supplier to major industrial consumers in the U.K. last year, according to Britain’s energy regulator Ofgem.
FT - of the six LNG tankers that have made deliveries into the UK so far in 2018 three have carried cargoes originally from Russia, leading to questions about whether Moscow was gaining a foothold in the UK gas market after starting up the Yamal LNG facility in Siberia late last year.
REUTERS - So far this year, two Yamal cargoes unloaded at British terminals for domestic consumption, accounting for about a third of Britain’s 2018 LNG imports after typical supplier Qatar pre-sold the bulk of its winter output to Asia last year.
REUTERS - U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $60.77 a barrel at 0753 GMT, up 6 cents, or 0.1 percent, from their previous settlement. Brent crude futures LCOc1 were at $64.62 per barrel, down just 2 cents from their last close.