Minsk, Belarus. March 22, 2019
Gazprom is planning to maintain its gas supply to Europe at the level of 200 billion cubic meters (BCM) of gas per year in 2019, A. Kruglov, Gazprom board deputy chairman, told reporters on March 22, 2019.
Gazprom reached volumes of export supplies above 200 BCM of gas per year for the first time in 2018 and now intends to at least maintain this level.
On February 26, 2019, on Investor Day in Hong Kong, Ye. Burmistrova, director of Gazprom Export, stated confidently that Gazprom could maintain exports to Europe at 200 BCM/year for a number of years to come. It is interesting that A. Kruglov assumed that gas exports to non-CIS countries could grow by about 20%, to more than 242 BCM/year by 2025, taking into account the achievement of the planned volumes of gas supplies to China at 38 BCM/year via the Power of Siberia-1 gas pipeline.
The key issue is the gas supply situation in 2019, as the new export gas pipelines Nord Stream 2, the Turk Stream, and Power of Siberia-1 are to be launched at the end of 2019. In this connection, reaching a level of more than 200 BCM/year in 2020 is not a problem, but one cannot be sure about Gazprom’s ability to reach this level in 2019, especially with the warm weather in Europe leading to a reduction in gas demand.
In the period from January 1 to March 15, 2019, Gazprom has reduced its gas supply to non-CIS countries by 8.2% when compared to the gas supply volumes for these 2.5 months in 2018, to 40.8 BCM.
In 2018, Gazprom increased gas exports to non-CIS countries by 3.8% compared with its 2017 exports, to 201.8 BCM. The company was planning to increase this to 204.5BCM/year (the maximum annual contract volume for all export contracts to non-CIS countries), but the export volumes were lower than expected. Gazprom increased its gas production by 5.7% in 2018 when compared to 2017, to 497.6 BCM.
In 2019, the Russian gas giant is planning to produce 495.1 BCM of gas, which is a 0.5% decrease from 2018. This is traditional for Gazprom, which usually adheres to a conservative and self-restrained approach when making production forecasts at the beginning of each year. During the year, the forecast for production volumes may be adjusted depending on the market situation.
Russia’s Gazprombank leaves Venezuela. Rosneft still stays.
Moscow, Russia. March 15, 2019
Gazprombank is minimizing risks in Venezuela. The bank has sold a 17% stake in GPB Global Resources which, in turn, owns 40% of Petrozamora, a joint venture with PDVSA, Reuters stated on March 14. The bank has confirmed the fact of leaving the joint venture without specifying any details.
Petrozamora was founded in 2012 to develop oil fields in Venezuela. In 2013, Gazprombank, GPB, Petrozamora, and PDVSA agreed to allocate up to $1 billion for the development of the joint venture. Now, Gazprombank does not have any investment projects in Venezuela.
Rosneft has become the only Russian company with large assets there, Kommersant noted. According to Reuters, the Russian giant oil company has lost about $9 billion on its investments in Venezuela since 2010. Rosneft is running five projects in Venezuela while producing a small share of its total oil production. The crisis in Venezuela involves the risk that the country will not be able to pay its debts.
Back in 2011, more than 66% of the Neftegaz.Ru survey respondents approved the participation of Russian companies in the development of the Orinoco fields. However, right now, this heavy and highly viscous oil that the fields have produced remains unsold, as buyers have become hesitant toward purchasing sanctioned oil. Over 8 billion barrels of crude oil are now stored in offshore oil tankers, as the onshore oil terminals are full. If the situation is not improved, we can expect Russian companies in Venezuela to report serious problems.
Moreover, these problems are already there. The excess of Venezuela’s oil supply has slowed down work on the Orinoco Belt, including projects for modernizing production facilities – projects which Rosneft is conducting in a joint venture with PDVSA. Rosneft has a share in five joint ventures: PetroVictoria, Petromiranda, Petromonagas, Boqueron, and Petroperija. The international rating agency Moody’s said the US sanctions against PDVSA would limit the financial and operational flexibility of Rosneft’s joint ventures in Venezuela since PDVSA owns more than 50% of each one of them.
As is known, Washington has posed large-scale sanctions against PDVSA designed to limit the export of Venezuelan oil and to force President Nicholas Maduro to resign. Russia is among the countries that continue to support Maduro. Over the past few years, the Russian Federation has become Venezuela’s last resort in terms of lenders. According to Reuters estimates, the Russian government and state-owned Rosneft have lent Venezuela at least $17 billion since 2006. Dmitry Peskov, Spokesman for the Russian President, said on March 1 that no negotiations on new financial support for Venezuela were being conducted at the presidential level, but Russia continued to maintain contacts with its partners in Venezuela.
“We are interested in continuing cooperation with Venezuela — especially as a number of our companies are running fairly large projects there. We hope that these projects have good potential, that they will have the potential for expansion, and of course, we wish the Venezuelan partners to cope with the difficulties they are facing, both political and economic ones, as soon as possible,” Peskov told reporters.