Russia loses its chance to capture the EU gas market

[Tom Kirkman + 8,860]

Some interesting bits highlighted below in bold.

Russia loses its chance to capture the EU gas market

... Russia is the world’s largest gas supplier, and accounts for 40 per cent of the EU’s total annual gas imports. Moscow would like to increase that percentage. In 2015, Russia’s Gazprom and a number of European energy companies agreed to construct the Nord Stream 2 gas pipeline on the seabed from Russia to Germany. It may allow Russia to supply additional 55 billion cubic metres to Europe annually and it may change the geopolitical map of Europe.

First of all, it would allow the Kremlin to further destabilise Ukraine without major consequences. Moscow currently exports around 90 billion cubic metres through the Ukrainian land transmission system and if that stops working for any reason, Russia loses tens of billions of US dollars. Should Russia’s president, Vladimir Putin, find another way to export these 90 billion cubic meters of gas, Kyiv will squander a lead against a rapid Russian military invasion. It also endangers the EU’s east. That’s why such countries as Poland have taken a stand against the Nord Stream 2 project.

Secondly, Nord Stream 2 increases Europe’s reliance on imported gas as European countries themselves produce less gas. It means a far bigger role for Russia and for its main gas partner in Europe – Germany. After the United States (the largest natural gas producer in the world) announced that it would impose sanctions on any company or person involved in the Nord Stream 2 construction, Berlin only intensified its attempts to complete the pipeline.  ...

 

... However, there is some good news. On May 15, Germany’s energy regulator declined to grant an exemption of rules governing the EU’s internal gas market to the operators of the Nord Stream 2 pipeline to carry gas from Russia to Germany under the Baltic Sea. On May 20, the German court reconfirmed its decision but stated that Nord Stream 1 can still operate with a waiver from such regulations. In plain language, 50 per cent of the Nord Stream 2 pipeline must be reserved for alternative suppliers, excluding Russian state company of Gazprom. That means that a pipeline costing 11 billion US dollars becomes far less useful, both through the lens of economics and in a political sense. Moscow has already stated that it will complete the installation of the pipeline, but the future of the project is unclear. Nevertheless, it has won a battle for Nord Stream 1, which remains 100 per cent functional.

It’s worth mentioning that Moscow’s experience of installing pipelines with other countries is very unsuccessful. For instance, the 20 billion US-dollar TurkStream project, which was scheduled to be completely launched on January 1 this year, is regularly closed for repairs and Russia can’t provide the expected supplies.

Russia’s Gazprom is predicted to suffer losses worth 10 billion US dollars this year. Its capital expenditures including gas transportation infrastructure are only growing and revenue is falling every year. If the lockdown continues, the EU will fill its gas storage capacity within the next three months and gas prices will fall. As such, Gazprom will see a huge drop in profit.

It would no longer be a question of merely losing the EU gas market but may even threaten Russia’s largest company with bankruptcy. Remember: Gazprom is a state-owned company which receives billions of dollars from the Russian budget to keep its operations running.  ...

 

[Marcin2 + 724]

Tom, each imperial overreach of US directly against its largest ally is weakening your country.

Why EU is reluctant to join Trump anti-China and anti-Russia crusade and hedge their bets ?

Cause we know we could be next if US becomes too strong, just vassals.

If we do not have Russian pipelines , US or China can disrupt our supply of LNG next year or in 20 years.

For EU bi-polar or tri-polar world ( with EU ) is more positive, we can gain more from Both superpowers.

And remember one thing: Russia will supply natural gas to EU for next 100 years No matter what is US view. You cannot change geography even sole superpower is not God.
Pipelines are the most stable way to transport natural gas.

Russian and North Sea fields are only that can be served by pipelines.

Russia does not have enough natural gas to monopolize EU market. Chinese market becomes more important each year.

Edited May 25, 2020 by Marcin2
Typo

[Tom Kirkman + 8,860]

54 minutes ago, Marcin2 said:

Tom, each imperial overreach of US directly against its largest ally is weakening your country.

Marcin, despite that I shared this article (for information and assorted viewpoints) I have stated repeatedly that I am generally in favor of increasing oil & gas pipeline infrastructure anywhere in the world, regardless of the country or the politics.  That includes Nord Stream 2.

EU should be able to have Nord Stream 1 and 2 and also have the option to import LNG.  Competition and choice are good.

 

[Marcin2 + 724]

Yes , you always stated that you are for as many connections and thus transport options as possible.

This was Usually in your preamble.

I only noted as i also duly always duly do that US chaotic non-strategy makes it weaker against Germany-Russia duO.

[Gregory Purcell + 94]

For technical reasons I don't fully understand major gas pipelines take 4-5 years to reach full nameplate capacity Gazproms pipeline to China Power of Siberia won't transport 38 Billion Cubic Meters per year until 2024 this year it should be 5 BCM will have,  So Gazprom and Germany have about two years after Nord Stream 2 is launched to find a solution.  And with the drop in overall demand because of the economic lockdown there is no great hurry.  

[Gregory Purcell + 94]

"Over 1.32 billion cubic meters (bcm) of Russian gas was transferred to Europe from Turkey via the TurkStream natural gas pipeline during the first quarter of 2020, according to industry sources Friday."         This would be ahead of scheduled, Gazprom was very clear with investors these pipelines will take 4-5 years to reach Nameplate capacity

 

https://www.dailysabah.com/business/energy/turkstream-transfers-over-132-bcm-of-russian-gas-to-europe-via-turkey-in-q1-2020 

Edited May 25, 2020 by Gregory Purcell

[Tom Kirkman + 8,860]

8 hours ago, Marcin2 said:

Yes , you always stated that you are for as many connections and thus transport options as possible.

This was Usually in your preamble.

I only noted as i also duly always duly do that US chaotic non-strategy makes it weaker against Germany-Russia duO.

Fair enough response then

[Coffeeguyzz + 454]

While high stakes geopolitics always play a large role in these affairs, from a strictly economic  perspective (cost/availability), people may continue to be surprised at just how competitive US LNG will  be in the coming decades.

For those who point to, say, North Dome economics vis a vis extraction, liquefaction and transport, or Russian piped to Eastern Europe as 2 examples ... this completely overlooks the needed governmental revenues that are needed from these hydrocarbon resources.

No one ever contests the cheap lifting costs from Ghawar.

But if the House of Saud needs $80+/bbl for governmental expenses, that be the 'real world' benchmark/threshold.

Likewise, the Al Thani regime seems to require $7+/mmbtu for ongoing, stable governance.

When Gazprom sells to the Turkish utility at $7+, when Qatar is vigorously engaged with both Pakistan and India for contracts above the $7 level, spot LNG at ~$5 looks pretty good to the buyer.

 

Appalachian Basin operators are striving to operate at a $2 HH world, and are hedging somewhat aggressively at the $2.50/$2.75  price points.

Associated gas out of the Permian may be willingly sold for far less now that adequate pipe is being emplaced.

The fast, cheap buildout of modular LNG plants bodes for very low cost natty, which is accompanying the global movement of Gas to Power incorporating CCGPs and FSRUs.

El Salvador is getting a re furbbed, ~20 year old LNG tanker to supply its CCGP project. Croatia's FSRU should be onsite in the near future. World's largest FSRU still scheduled for Hong Kong if internal turmoil does not derail.

Pakistan, Bangladesh, Brazil, Poland, Germany and many others are in some stage of getting/already have FSRUs or additions.

All to be supplied with LNG.

Heck, even Port Kembla may be importing LNG in the next 18 months.

Coals to Newcastle, indeed.

[ronwagn + 6,290]

16 hours ago, Marcin2 said:

Tom, each imperial overreach of US directly against its largest ally is weakening your country.

Why EU is reluctant to join Trump anti-China and anti-Russia crusade and hedge their bets ?

Cause we know we could be next if US becomes too strong, just vassals.

If we do not have Russian pipelines , US or China can disrupt our supply of LNG next year or in 20 years.

For EU bi-polar or tri-polar world ( with EU ) is more positive, we can gain more from Both superpowers.

And remember one thing: Russia will supply natural gas to EU for next 100 years No matter what is US view. You cannot change geography even sole superpower is not God.
Pipelines are the most stable way to transport natural gas.

Russian and North Sea fields are only that can be served by pipelines.

Russia does not have enough natural gas to monopolize EU market. Chinese market becomes more important each year.

Natural gas is available from many suppliers not far from Europe. They have pipelines, ships, and rails for LNG. Supply is not a problem at all. Cheapest price is the Russian advantage but they want a monopoly on the business so that they can be assured of a tidy profit. 

[Marcin2 + 724]

47 minutes ago, ronwagn said:

Supply is not a problem at all

It is all about safety of natural gas supply.

US routinely sanctions its adversaries so that they cannot export their hydrocarbons, We all know that it is lawless but US is strong enough to do it.

There is nothing in this world, that can prevent Russian exports of hydrocarbons by Russian pipelines.

Even US cannot do it, so safety of supply.

I understand that US has geopolitical goals, but in Europe we have winter.

[footeab@yahoo.com + 2,131]

4 hours ago, Marcin2 said:

It is all about safety of natural gas supply.

I understand that US has geopolitical goals, but in Europe we have winter.

*** but in EASTERN Europe we have winter. 

I do not believe the pie in the sky utopians in western Europe believes winter exists judging by their renewables policy.  Then again, because of their renewables policy, they require GOBS and GOBS of NG. 

Nordstream 2 will be used.  It is only a matter of when and Russia has the gas for the next 100 years easily.  Until a line from Algeria, Lybia, Egypt, Israel, Qatar, Iran, Turkmenistan gets run and competes.  Truth is, Europe is SURROUNDED by the worlds largest NG fields.  Just not IN Europe.  Those pipelines will get run, because the countries stated above all want to EAT and Europe produces a surplus of food as their geography is supurb and the surrounding countries Geography... sucks or is mediocre at best. 

EDIT: Why do they want to eat?  Because they are having tons of babies(not Russia), just everyone else.  Ah, Islam and its Harems...

Edited May 26, 2020 by footeab@yahoo.com

[footeab@yahoo.com + 2,131]

5 hours ago, ronwagn said:

Natural gas is available from many suppliers not far from Europe. They have pipelines, ships, and rails for LNG. Supply is not a problem at all. Cheapest price is the Russian advantage but they want a monopoly on the business so that they can be assured of a tidy profit. 

Yes.  Russians have kaboshed Turkmenistan by invading Georgia and taking the pipeline route from them.

Russia actively is supporting Syria(but that was a given) and they must be leaning massively on IRAN to NOT run or propose a pipeline through Syria/Iraq to the Med which Qatar/S. Arabia want.  Now that Israel/Egypt have their shared NG field they can supply but are not going to be all inclined to allow S. Arabia, Qatar passage, but then again, strange bed fellows and the Prince may be able to overcome their Islam deficiencies by putting it through the Red Sea, Sinai past their paid off Bedouin nomad ISIS friends and to the Mediterranean, or GASP*** through Israel/Sinai.  Of course this assumes Egypt would go for it.  Hrmm....

It is quite understandable why everyone was moving in on Libya... it is effectively unpopulated other than one city on its far edge by Tunisia and this city is ~1000km from the gas fields and not a single soul lives between said city and said gas fields.  Benghazi has almost no population other than it existing on a map.  If one were truly brutal like the English imperial Empire when they grabbed the choicest bits of the world for different resources, Libya, specifically EASTERN Libya looks like one of the worlds easiest juiciest prizes.  Next easiest target?  Western Australia.  Without the USA looming from afar(assuming USA pulls back massively) Western Australia has to be #1 target for India, Indonesia, China, Japan, and anyone else with a navy large enough to set sail with a BB gun, and a sparkler to scare the Aussies who have no guns or any other way of protecting themselves.  All the worlds resources ready to be exploited and only ~2 million people all in one city without any hospitibale land nearby from which to operate Guerilla tactics.  To be mean, cut off their water, and W. Aus falls in a day.  Brutal, but easy to effect.

[Douglas Buckland + 6,308]

21 hours ago, Marcin2 said:

Tom, each imperial overreach of US directly against its largest ally is weakening your country.

Why EU is reluctant to join Trump anti-China and anti-Russia crusade and hedge their bets ?

Cause we know we could be next if US becomes too strong, just vassals.

If we do not have Russian pipelines , US or China can disrupt our supply of LNG next year or in 20 years.

For EU bi-polar or tri-polar world ( with EU ) is more positive, we can gain more from Both superpowers.

And remember one thing: Russia will supply natural gas to EU for next 100 years No matter what is US view. You cannot change geography even sole superpower is not God.
Pipelines are the most stable way to transport natural gas.

Russian and North Sea fields are only that can be served by pipelines.

Russia does not have enough natural gas to monopolize EU market. Chinese market becomes more important each year.

Good, just go ahead and become a vassal state of Russia, I think both Poland and Germany have experience in that arena.

As I have said before, if you want to be a victim - you will be a victim.

You seem to believe that Germany and Poland have no choice but to be a vassal of either the US or Russia, are you telling me that neither country has a will of it’s own?

[Tomasz + 1,608]

I suggest reading it carefully - its about Nord Stream II and polish-russian gas relations

https://www.oxfordenergy.org/wpcms/wp-content/uploads/2020/06/Russian-Poland-gas-relationship-risks-and-uncertainties-Insight-70.pdf

Quote

Other suppliers to Europe have higher variable costs of supply, and low gas prices are going to hurt them more, fostering market rebalancing. But before this happens, gas suppliers have to survive the gas glut and rock-bottom prices. By the end of May 2020 gas prices at European hubs had dropped to $1/MMBtu, and the outlook for the remainder of Q2/Q3 2020 is dismal. Gazprom will be under pressure to rationalise its sales channels and cut overall transit costs. Nord Stream has been operating under a ship-or-pay principle, and the key to a lower unit transit tariff is high utilisation – exactly what has been happening. The Ukrainian route – after a deal driven more by politics than economics – can be considered a sunk cost and will be utilised closely to pre-paid levels. The only transit route where Gazprom will not have a long-term ship-or-pay obligation after mid-May 2020 is via Poland, exposing EuRoPol to the risk of lower transit flows in the situation of a possible transit capacity surplus. Obviously, future EuRoPol utilization depends on how commercially advantageous it is for Gazprom to use other routes. Since Poland is an EU country, Gazprom can follow European rules and book capacity as it sees fit. If the Polish regulator sets the tariff high, then Gazprom may decide against using it. If the tariff is competitive, the chances for higher usage of EuRoPol are greater

Quote

As noted above, the Polish state’s transit revenue under the Yamal contract has been relatively small.88 Earlier, Polish officials had expressed their displeasure with the contract terms stipulated in the IGA. Piotr Naimski, a Polish official in charge of energy security, said that Poland was pumping about 30 Bcm of gas to Germany through its section of the gas pipeline every year, and maintaining the transit of such an amount of raw materials is “a matter of business.” In accordance with the IGA, Poland was receiving 21 million zlotys per year ($5.4 million) for the Russian gas transit and such a fee was “actually equal to zero,” the official was quoted as saying. Gazprom should pay the market price for its gas transit, Naimski noted.89 Now that Gazprom has booked capacity for Q3 2020 at “market prices” in an open auction, and that price turned out to be lower than under the old IGA, the Polish officials might need to recognise that market forces are a double-edged sword.

Quote

Poland has been pursuing a policy of diversifying away from Russian gas for many years. This has been driven as much by politics as it has by economics. Nevertheless, it has now developed a portfolio of LNG and alternative pipeline options that might replace all its Russian gas imports by the middle of the 2020s, if the new projects proceed according to plan. There may be a price to pay for this diversification, especially if the global gas market tightens and prices rise, as Poland seems to be cutting off a relatively cheap cost of supply. In addition, Russian gas could offer it a source of energy with lower emissions; however, Poland seems determined to reject this. Poland’s security of gas supply for the period from 2023 is now dependent on two bets – on LNG and on Baltic pipe, each of them with a new set of risks. On the flip side, Russia has decided to adopt a policy of increasing its export transit options. The construction of Nord Stream 2 and the recent deal with Ukraine have left Yamal-Europe as the new swing producer in this strategy. This situation has been exacerbated by the ending of the long-term transit contract and the sharp fall in European gas demand as the result of the COVID-19 crisis. Gazprom now has the option to contract for capacity in Yamal-Europe on a flexible auction basis and will do so if demand for its gas in Europe is high enough and if the tariff for transit is competitive enough. The Polish authorities may therefore have to resign themselves to more volatile and lower transit revenues depending on the outturn of the European gas market in a post COVID-19 world and also on Gazprom’s export strategy.

 

Edited June 3, 2020 by Tomasz

[BenFranklin'sSpectacles + 762]

On 5/25/2020 at 8:44 PM, Coffeeguyzz said:

Likewise, the Al Thani regime seems to require $7+/mmbtu for ongoing, stable governance.

I haven't had a chance to look into this, but it's interesting. Would you point me towards a good source?

[BenFranklin'sSpectacles + 762]

On 5/26/2020 at 1:33 AM, Marcin2 said:

I understand that US has geopolitical goals, but in Europe we have winter.

There it is: at the end of the day, people protect their own interests. 

Good post.

[BenFranklin'sSpectacles + 762]

On 5/26/2020 at 6:18 AM, Douglas Buckland said:

Good, just go ahead and become a vassal state of Russia, I think both Poland and Germany have experience in that arena.

As I have said before, if you want to be a victim - you will be a victim.

You seem to believe that Germany and Poland have no choice but to be a vassal of either the US or Russia, are you telling me that neither country has a will of it’s own?

Thus, Western Europe's push for renewables.

Of course, it would be far more effective to use coal and nuclear. I suspect that's why Western liberal idiots are so violently opposed to these technologies: their handlers wound them up for geopolitical advantage.

[Coffeeguyzz + 454]

Mr. BenF

My comment referring to Qatar needing ~$7/mmbtu stems from their ongoing negotiations with both Pakistan and India for long term, contracted LNG deliveries.

(This market is especially intriguing as both countries are dramatically ramping up infrastructure for natgas distribution. One of Pakistan's FSRUs is the world's busiest).

While it is, understandably, not practical to expect the Al Thani regime to produce a spreadsheet describing their financials, the fact that a 'line in the sand'  seems to be drawn at the 7 buck threshold indicates their perceived importance of that number.

As an aside, the pricing of their LNG is tied to one of the oil indices, not Henry Hub.

 

In another thread (cannot locate it now), you asked something about low/lowest cost natgas production globally.

Ultra short result of whirlwind researching indicates that Turkmenistan and Venezuela (?) have the lowest lifting cost with Algeria being in third place at 70 cents/mmbtu at the wellhead. I will return to learning more of the specifics of production from Indonesia, Malaysia, Egypt, Philippines et al as I was surprised at how relatively expensive it is to extract natty from the ground/water in these countries.

Setting aside the governmental revenue needs, there seems to be less product available for export - whether by pipe or ship - at pricing under ~$6/mmbtu. Russia may be the exception as they claim to be prepared to pipe natty into Europe as low as $4.

Growing domestic consumption looms large as these ~30 to 50 Trillion cubic foot fields do not compare very favorably to, say, the Appalachian Basin, which now produces ~12 Tcf each year. The fact that  AB operators are on the cusp of viably producing at $2 HH is a story for another time.

Edited October 5, 2020 by Coffeeguyzz

[Tomasz + 1,608]

 

In the spring, when natural  gas prices dropped dramatically, the Russian business newspaper rbc.ru estimated that Gazprom earns on gas supplies via Nord Stream I at a gas price of $ 90-100, and that this price already includes an export tax of $ 27 at $ 100 $.

According to the Oxford Institute for Energy Studies, American LNG from the Permian field is a minimum requirement

$ 2.25 per mbbtu raw material price

$ 2.25-2.5 per meter of gas supply

$ 1.20 shipping

0.4-0.7 $ regasification

So this gives us a final price in the range of $ 6.1 to $ 6.6 per mbbtu as the minimum profitability price.

There was a special report by the Oxford Institute for Energy Study for 2025 on this subject.

Competitiveness was examined for an environment of low $ 6 and high $ 8 prices.

As far as I remember, Qatar met the requirement of low prices for Europe, and most LNG exporters met the requirements of high prices, including new terminals in the USA and the Novatek terminal.

As far as I remember, even the high limit was not met by the existing old terminals in the USA according to the Chenniere price contract formula as 115% of Henry Hubb's price plus $ 3-3.5 for gasification.

 

And especially about the topic is new report bt Oxford Insitute for Energy Studies

https://www.oxfordenergy.org/wpcms/wp-content/uploads/2020/09/Russian-Gas-the-year-of-living-dangerously.pdf

Edited October 5, 2020 by Tomasz

[Coffeeguyzz + 454]

Mr. Tomasz

Wow. I just finished reading that report on 'Russian Gas, The year of living dangerously'  and need to go back and study it carefully as it contains such a wealth of information.

Virtually every single report that comes out of the OIES is professional grade, no B.S. booster type crap. Simply a treasure trove of highly informative data.

 

Quick takeaway from that Russian Gas report (published just last week, September 30) ... cost to Gazprom at the wellhead ~75 cents/mmbtu including production tax (MET - Mineral Extraction Tax) which is slighly more than the cost of the product. 

Transportation to western border of Russia ... ~ 90 cents/mmbtu.

Combined cost to produce and pipe to border ... $1.70/$1.90 per mmbtu.

These figures come from pages #13 through #15 from that outstanding paper.

Outside-the-border fees range from Nordstream 1 to Ukraine's,  et al, tarriffs.

At the end of the report, Gazprom expects sustainable operations at the $5 to $7 per mmbtu price points.

 

Mr. Tomasz, I cannot locate your earlier referenced OIES  report discussing the costs for US LNG production.

Are you able to steer me towards that publication?

Thanks.

[dukeNukem + 80]

3 hours ago, Tomasz said:

 

In the spring, when natural  gas prices dropped dramatically, the Russian business newspaper rbc.ru estimated that Gazprom earns on gas supplies via Nord Stream I at a gas price of $ 90-100, and that this price already includes an export tax of $ 27 at $ 100 $.

According to the Oxford Institute for Energy Studies, American LNG from the Permian field is a minimum requirement

$ 2.25 per mbbtu raw material price

$ 2.25-2.5 per meter of gas supply

$ 1.20 shipping

0.4-0.7 $ regasification

So this gives us a final price in the range of $ 6.1 to $ 6.6 per mbbtu as the minimum profitability price.

There was a special report by the Oxford Institute for Energy Study for 2025 on this subject.

Competitiveness was examined for an environment of low $ 6 and high $ 8 prices.

As far as I remember, Qatar met the requirement of low prices for Europe, and most LNG exporters met the requirements of high prices, including new terminals in the USA and the Novatek terminal.

As far as I remember, even the high limit was not met by the existing old terminals in the USA according to the Chenniere price contract formula as 115% of Henry Hubb's price plus $ 3-3.5 for gasification.

 

And especially about the topic is new report bt Oxford Insitute for Energy Studies

https://www.oxfordenergy.org/wpcms/wp-content/uploads/2020/09/Russian-Gas-the-year-of-living-dangerously.pdf

You might be interesting in this Shell FID presentaion for Canada....some numbers on page 9. US breakeven looks approx 6-6.5 $ mmBTU these days.

Shell expected to get 13% IRR with 8.5$ mmBTU in Japan 

lng-canada-fid-webcast-01102018.pdf

[Tomasz + 1,608]

https://www.kommersant.ru/doc/4520059

Quote

 

In early October, Gazprom made full use of the available capacity of the Ukrainian gas transmission system for the first time. The company is now fully loading all major gas pipelines in the direction of Europe, seeking to take advantage of increased gas prices and the temporary weakening of competition from LNG suppliers. According to analysts, the current gas prices in Europe for the first time this year allow Gazprom to earn money on exports, regardless of the delivery route.

On October 4, Gazprom used the capacity of the Ukrainian transit route to the maximum for the first time this year, pumping 174 million cubic meters, the operator of the Ukrainian gas transportation system said in a statement. This is the maximum volume that the company can pump through Ukraine per day according to the contract signed at the end of 2019. However, the monopoly can buy capacity at auctions — at the end of September, Naftogaz of Ukraine reported that Gazprom did so for October deliveries, without specifying specific volumes. Gazprom did not comment on this issue.

As follows from the data of European gas transport operators, Gazprom used the Ukrainian route only after the maximum load of Nord stream (156 million cubic meters) and Yamal—Europe (89 million cubic meters).

Thus, the company is doing its best to increase export supplies, which were significantly undermined by the coronavirus and strong competition from LNG in the first half of the year.

The increase in exports since the beginning of October is explained by the fact that the fourth quarter has come, respectively, Gazprom's contracts with oil indexation for the first time fully took into account the dramatic drop in oil prices in the second quarter (the price takes into account the dynamics over the past six or nine months, depending on the contract).

Norway is tired of producing oil

Physically, demand from European customers has not increased significantly yet, and gas is being pumped into storage facilities: from October 1 to October 4, the volume of daily gas injection into underground storage facilities (UGS) in Europe increased almost 2.5 times, to 248 million cubic meters per day. On the other hand, this behavior of companies and traders, despite the fact that UGS are already more than 95% full, shows that they expect gas prices to rise in Europe in the coming months.

Meanwhile, the spot price on the most liquid European hub TTF on October 5 reached the highest level since the beginning of the year — about $156 per 1 thousand cubic meters. The dynamics are partly related to the rise in oil prices, as well as the possible consequences of strikes at fields in Norway.

 

 

 

Quote

 

Thanks to the price increase, Gazprom's exports to Europe via all major gas pipelines reached a stable positive area for the first time this year.

According to Vitaly Yermakov, an expert at the HSE faculty of world Economics, PREPARED for OIES, exports via Nord stream and Yamal—Europe are profitable (that is, export netback exceeds the cost of deliveries) at prices starting from $110 per 1,000 cubic meters, and in Ukraine — from $145 per 1,000 cubic meters (but only when the contract capacity is fully used). Due to falling prices in Europe and low pumping, the margin of export deliveries through Ukraine has so far been negative since January.

Almost records are expected from Gazprom

LNG, the main competitor of Russian gas, which significantly pushed Gazprom in the first half of the year in the European market, is now losing ground. In September, shipments to the EU fell by 12.5% year-on-year, mainly due to the fact that Asian markets began to offer a higher premium and traders began to redirect cargo there. Another significant factor was the severe storms in the Gulf of Mexico, which led to the cancellation of about 20 cargo at American LNG plants, which are still operating with a capacity of 60% of the project. However, LNG shipments from the US are expected to increase in October, but without further increases in gas prices in Europe, these tankers will mostly go to Asia.

Gazprom's current production indicators are fully in line with market demand and the overall macroeconomic situation. The situation has been normalizing in recent months

"As in previous gas demand crises in Europe, for example in 2010, Russia demonstrates that it can take on the role of a balancing supplier in the short term," says Vitaly Ermakov.— At the same time, the reality of this year clearly shows that Gazprom does not want to start a price war in a situation of falling demand, which it believes will be painful, but temporary. While waiting for demand to recover, Gazprom patiently accepts the price offered by the market and optimizes its sales strategy in an attempt to minimize losses."

 

 

Edited October 6, 2020 by Tomasz

[Tomasz + 1,608]

23 hours ago, Coffeeguyzz said:

Mr. Tomasz

Wow. I just finished reading that report on 'Russian Gas, The year of living dangerously'  and need to go back and study it carefully as it contains such a wealth of information.

Virtually every single report that comes out of the OIES is professional grade, no B.S. booster type crap. Simply a treasure trove of highly informative data.

 

Quick takeaway from that Russian Gas report (published just last week, September 30) ... cost to Gazprom at the wellhead ~75 cents/mmbtu including production tax (MET - Mineral Extraction Tax) which is slighly more than the cost of the product. 

Transportation to western border of Russia ... ~ 90 cents/mmbtu.

Combined cost to produce and pipe to border ... $1.70/$1.90 per mmbtu.

These figures come from pages #13 through #15 from that outstanding paper.

Outside-the-border fees range from Nordstream 1 to Ukraine's,  et al, tarriffs.

At the end of the report, Gazprom expects sustainable operations at the $5 to $7 per mmbtu price points.

 

Mr. Tomasz, I cannot locate your earlier referenced OIES  report discussing the costs for US LNG production.

Are you able to steer me towards that publication?

Thanks.

I finally found it

https://www.oxfordenergy.org/publications/outlook-competitive-lng-supply/

 

In general, I strongly encourage everyone to read the reports of the Oxford Institute for Energy Studies. They are very honest and factual. I cant find there any political distortion or propaganda.

 

In my opinion, they are more objective and the peak of objectivity are the EIA reports clearly showing me on white how much each LNG shipment from the USA costs. In Poland, the government propaganda says that LNG from America is far cheaper than Gazprom gas and I really appreciate the transparency of the USA, which indicates that your LNG is rather more expensive, and details for each delivery with information updated after the quarter.In my opinion, they are more objective and the peak of objectivity are the EIA reports clearly showing me on white how much eaIch LNG shipment from the USA costs. In Poland, the government propaganda says that LNG from America is far cheaper than Gazprom gas and I really appreciate the transparency of the USA, which indicates that your LNG is rather more expensive, and details for each delivery with information updated after the quarter.

By the way, this is my tip if you want to translate something about Gazprom from Russian. Google Translator is a great tool and every year it translates better and better, but when it comes to translating from Russian, Yandex Translate translates better. Yandex is probably the largest Russian-Israeli IT company in Europe. Such an example of a growing Russian-Israeli symbiosis, if only because over 2 million Jews from USSR living currently in Israel after 1991.

The Yandex search engine is also much better than the Google engine  for searching the Russian net. And for viewing data uncensored by Google you should use Duck Duck Go.

Besides, a lot of of the Russian and Ukrainian oligarchs are of Jewish origin. I will say more there is  Putin's application for admission to the KGB  circulating on the Russian net. In the Soviet Union, the nationality of the father and mother was inscribed. So he wrote father a Russian and a Jewish mother, which in general probably would make him a Jew according to Jewish law.

Just if someone wouldn't take it for anti-Semitism. So many Poles and Russians are definately anti-Semites, I myself have such people in my immediate family, but for me it is such a curiosity.

Edited October 6, 2020 by Tomasz

[Tomasz + 1,608]

Quote

 

Polish watchdog fines Gazprom $7.6 billion over Nord Stream 2 gas pipeline

WARSAW (Reuters) - Poland's anti-monopoly watchdog said on Wednesday it had fined Russia's Gazprom GAZP.MM more than 29 billion zlotys ($7.6 billion) for building the Nord Stream 2 gas pipeline without its approval.

The UOKiK watchdog also said it had imposed a 234 million zloty fine on five other firms involved in financing $11 billion project set to double Russia’s gas export capacity via the Baltic Sea.

Nord Stream 2 is led by Gazprom, with half of the funding provided by Germany's Uniper UN01.DE and BASF's BASFn.DE Wintershall unit, Anglo-Dutch company Shell RDSa.L, Austria's OMV OMVV.VI and Engie ENGIE.PA.

Poland sees Nord Stream 2 as a threat to Europe’s energy security as it will increase reliance on Russian energy.

The United States has also imposed sanctions on companies laying pipes for the project.

UOKiK has been examining the project for years. In August it fined Gazprom 213 million zlotys over a lack of cooperation regarding the project.

“The launch of NS2 will threaten the continuity of natural gas supplies to Poland. An increase in the price of the product is also highly likely, with the said increase being borne by Polish consumers,” said Tomasz Chrostny, president of UOKiK.

“Completion of this investment project increases economic dependence on Russian gas - not only in the case of Poland, but also of other European states,” Chrostny said.

Gazprom did not reply to a request for immediate comment.

Construction of the 1,230-kilometre pipeline is nearly finished but for a final stretch of roughly 120 km in Danish waters.

Work was halted in December as pipe-laying company Swiss-Dutch Allseas suspended operations because of the U.S. sanctions targeting companies providing vessels.

($1 = 3.8107 zlotys)

 

https://www.reuters.com/article/us-nordstream-poland-gazprom/polish-watchdog-fines-gazprom-7-6-billion-over-nord-stream-2-idUSKBN26S19J

Generally, good luck in the execution of such a penalty.Not even $ 7.6 billion, but  $ 7.6 million.

It also means that the more and more Nord Stream II is needed, because I am increasingly able to imagine a situation in which the current Polish government will stop the transit of Russian gas to the West, without looking at the consequences. The Polish position towards Western Europe is more or less to stop Nord Stream II and allow yourself to be blackmailed further by Poland and Ukraine.

Edited October 7, 2020 by Tomasz

[Tom Nolan + 2,441]

3 hours ago, Tomasz said:

Generally, good luck in the execution of such a penalty.Not even $ 7.6 billion, but  $ 7.6 million.

It also means that the more and more Nord Stream II is needed, because I am increasingly able to imagine a situation in which the current Polish government will stop the transit of Russian gas to the West, without looking at the consequences. The Polish position towards Western Europe is more or less to stop Nord Stream II and allow yourself to be blackmailed further by Poland and Ukraine.

There is a lot of insight in those words.  Thanks.