MORE RUSSIAN GAS FOR EUROPE

PLATTS - 07 Dec 2021 - A plan to allow Russia's Rosneft the right to export pipeline gas to Europe for the first time should be agreed and presented to President Vladimir Putin by the start of March next year, Russian news agency Interfax reported Dec. 7.

According to documents seen by the agency, the deadline was set at a Russian government meeting in October.

The report said the government, Rosneft and gas giant Gazprom were tasked with coming to an agreement on the implementation of a "pilot" project under which Rosneft would supply 10 Bcm of Russian gas to Europe.

The news of the "pilot" project was widely reported at the time, though there was no indication then of the timings involved.

Neither Rosneft, Gazprom nor the energy ministry responded to a request for comment Dec. 7.

However, since the October meeting, officials -- including Deputy Prime Minister Alexander Novak -- have said the details of how such a plan might work were being looked into.

Rosneft said on Oct. 14 that it was considering the possibility of supplying the "pilot" gas to Europe under an export contract with BP.

"Implementation of a pilot project for the export of 10 Bcm of gas from Rosneft resources under a contract with BP could help provide additional supplies to the European gas market in the future," CEO Igor Sechin said at the time.

BP -- which holds a 19.75% stake in Rosneft -- previously signed an agreement with the Russian company on potential joint gas supplies to Europe in 2017.

Export monopoly

The main obstacle to any potential future export of gas to Europe by Rosneft is the fact that Gazprom has a monopoly on pipeline exports from Russia.

Other Russian gas producers -- such as Novatek -- are allowed to export gas in the form of LNG, but Gazprom is the only company currently permitted to export pipeline gas.

Rosneft and Novatek have in the past urged Moscow to change the law to allow them to export gas via Russia's vast pipeline network.

Historically, the Russian government has always rejected such a move, but in recent months Russian officials have said they are considering granting Rosneft the right to export pipeline gas.

The issue has again come to the fore after the amended EU Gas Directive -- which came into effect in May 2019 -- required new non-EU pipelines to Europe to grant third-party access to their capacity.

The now-complete 55 Bcm/year Nord Stream 2 pipeline has to comply with the new regulations, and allowing Rosneft to take capacity in the link is seen as one potential way to ensure regulatory compliance.

Gazprom has said that there is no need to give Rosneft the right to export pipeline gas, though, given that Gazprom has sufficient gas resources to supply Europe by itself.

However, Gazprom has come in for criticism in recent months for not increasing supply to Europe at a time of sky-high gas prices.

S&P Global Platts assessed the TTF day-ahead price at a record high of Eur116.10/MWh on Oct. 5, with price volatility continuing into December.

The TTF day-ahead price was assessed at Eur89.40/MWh on Dec. 6, up by 511% compared with the same assessment a year ago.

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