Russian Oil and Gas Industry: News #2

Germany not to change its position on Nord Stream 2

Germany's position on the construction of the Nord Stream 2 gas pipeline remains unchanged - the project must be completed. It was stated by German Foreign Minister Heiko Maas, presenting the priorities of Berlin during its presidency of the European Union, Deutsche Welle reports.

"We will not change our decision on this project. We believe that it is an issue of diversification of our energy supply sources," the minister said, commenting on the construction of the Nord Stream 2 gas pipeline, which Russian Gazprom is trying to complete.

Maas noted that it was a matter of economic policy for Berlin.

JohninMK wrote:The US not letting up. Now adding TurkStream to the pot.


Washington, July 16 : US Secretary of State Mike Pompeo has threatened companies involved in the Nord Stream 2 gas pipeline between Russia and Germany and the TurkStream pipeline project stretching from Russia to Turkey across the Black Sea.

"Today, the Department of State is updating the public guidance for CAATSA (Countering America's Adversaries Through Sanctions Act) authorities to include Nord Stream 2 and the second line of TurkStream 2," Pompeo was quoted by the Xinhua news agency as saying at a press briefing on Wednesday.

"This action puts investments or other activities that are related to these Russian energy export pipelines at risk of US sanctions," he added.

Pompeo said that the two projects are not commercial but serve as Moscow's tools to exploit European dependence on Russia's energy supplies that ultimately undermine transatlantic security.

"Companies aiding and abetting Russia's malign influence projects will not be tolerated," he noted.

"Get out now or risk the consequences."

President Donald Trump has long voiced his discontentment about the Nord Stream 2 project, complaining about Germany's large payment to Russia on energy and "delinquency" on military spending.

The Nord Stream 2, stretching 1,230 km from Russia to Germany via the Baltic Sea, is scheduled to start operation in the middle of 2020.

Meanwhile, the TurkStream, which was inaugurated in January, will provide gas to Turkey and the south and southeast Europe in two parallel pipelines, running 930 km through the Black Sea, from the Russian city of Anapa to the northwestern Turkish town of Kiyikoy in the Trace region.

One pipeline will supply gas to Turkey, and the other will reach the Turkish-European border to carry the gas first to Bulgaria, Serbia and Hungary.

TurkStream will deliver a total of 31.5 billion cubic metres of Russian natural gas each year, with Turkey receiving half of it and Europe, the rest.

Germany rejects U.S. sanctions threat over Nord Stream 2 pipeline

German industries condemn US sanctions threat against Nord Stream 2 pipeline

US sanctions against Nord Stream 2 contradict international law - EU

NOVATEK shipped the first LNG shipment to Japan via the Northern Sea Route

PAO NOVATEK announces the first supply of liquefied natural gas (LNG) from the Yamal LNG project to Japan via the eastern route of the Northern Sea Route, which was carried out by a subsidiary of the Company NOVATEK Gas & Power Asia Pte. Ltd.

The consignment was delivered by the Vladimir Rusanov gas carrier under a spot contract. In full compliance with the schedule, the unloading was carried out at the Ohgishima LNG Terminal in Japan.

This is the first successful experience of calling and unloading an ice-class LNG carrier Arc 7 in a Japanese port, which will further increase the volume of LNG supplies to this country.

“We pay great attention to the development of the logistics chain of our LNG projects,” said Lev Feodosiev, First Deputy Chairman of the Management Board of PAO NOVATEK. “The planned commissioning of a transshipment terminal in Kamchatka will significantly expand the possibilities for competitive LNG supplies throughout the Asia-Pacific region.”

Yamal LNG (50.1% - from Novatek, 20% - from French Total and Chinese CNPC, 9.9% - from the Silk Road Fund) is Novatek's first plant to liquefy gas. The project is being implemented on the basis of the South Tambeyskoye field (Yamal Peninsula). The plant has launched three technological lines for the production of LNG with a capacity of about 5.5 million tons per year each; in 2020, the fourth stage of Yamal LNG is expected to be launched.

By the way, according to the latest BP statistical yearbook, the actual geography of LNG supplies from Russia in 2019 turned out to be the following (they have quite adequate figures for LNG trade, since they use market sources):

Europe - 15 million tons

Latin America - 0.1 million tons

Middle East - 0.6 million tons

Asia-Pacific region - 13.2 million tons, including : Japan - 6.4, China - 2.5, Rep. Korea - 2.3, Taiwan - 1.5, India - 0.2, others - 0.3.

Since Sakhalin ships 10-12 million tons of LNG, supplies to Asia from Yamal were small, although Asia has always been viewed as a more attractive market.

Russia Reportedly Surpassed US in LNG Exports to China in June

MOSCOW (Sputnik) - Russia exported 396,000 tonnes of liquefied natural gas (LNG) to China in June, while US exports amounted to 340,000 tonnes during the same period, Bloomberg reported on Monday, citing data from China’s General Administration of Customs.

According to the customs data released on Sunday, Russia’s LNG exports to China increased by 20.7 percent compared to May figures, while US exports were 2.4 percent higher than in May.

In June 2019, Russia exported 67,000 tonnes of LNG to China. The US did not export LNG to China a year ago.

Overall, China imported 5.79 million tonnes of LNG in June, up by 29 percent when compared to last year.

Russia’s Oil Product Exports To The U.S. Jump To 16-Year High

EU forms defensive front against USA in the dispute over Nord Stream 2

Disdaining US threats, Germany, Russia forge ahead with Nord Stream 2

US senators’ letter on Nord Stream 2 sparks outrage in Germany

A letter sent by three US senators warning the owner of a port on the Baltic Sea of “crushing legal and economic sanctions” if it continued to provide “significant goods, services, and support” for the controversial Nord Stream 2 gas pipeline has caused outrage in Germany.

Republican lawmakers Ted Cruz, Tom Cotton and Ron Johnson sent the letter to Fährhafen Sassnitz GmbH, the operator of Mukran Port, on August 5. In the letter, they drew attention to the “broad array of US sanctions and guidance targeting the Nord Stream 2 project”.

The move pitched the municipality of Sassnitz, which owns 90 per cent of the company, into the middle of the intensifying transatlantic struggle over the pipeline, owned by the Russian gas company Gazprom.

It was a development that Frank Kracht, the mayor of Sassnitz, said will have serious implications for local officials including himself. Now German politicians across the political spectrum are demanding retaliation against an ally they say has gone too far.

“[The senators] have no right to influence the sovereignty of our city or our state, the sovereignty of our federal republic, or of Europe with such letters,” Mr Kracht told the Financial Times. 

The far-right Alternative for Germany party (AfD) has called for sanctions on Russia, imposed in response to its annexation of Crimea, to be lifted. Meanwhile, the Greens’ foreign affairs representative, Jürgen Tritt, described the American senators’ threats as an “economic declaration of war”. He called for German companies to be given protection against the “Wild West methods of Washington”.

Last week, in a fresh turn in this increasingly bitter tussle, Klaus Ernst, who represents the leftwing Die Linke party in the Bundestag, sent a letter in response to the Senate foreign relations committee.

In the letter, seen by the FT, he asked the senators to “imagine” if Germany were to write in such a manner to American ports of similar size, mentioning Lewiston in Idaho, the home state of Jim Risch, the chairman of the committee.

Nord Stream 2 has been controversial since its inception. The US argues that the pipeline, which terminates at a receiving station in northern Germany, increases European energy dependency on Russia. Berlin, which backs the project despite complaints from some eastern European neighbours, believes Washington wants to scupper it in order to sell the continent American liquefied natural gas.

For months, German officials largely ignored US objections, which enjoy bipartisan support and are therefore likely to persist, whatever the result of November’s presidential election.

In July, however, Germany began to take US threats seriously after Mr Cruz, a Republican, and Democratic Senator Jeanne Shaheen pushed a bill to toughen sanctions in such a way that even companies or officials working only indirectly on the pipeline could be affected.

Mr Kracht said neither he nor Mukran Port would respond to the senators. “This letter is structured to spread fear, create insecurity,” he said. “I will not deal with such weapons.”

U.S. Sanctions Said Unlikely to Halt Nord Stream 2 Pipeline

Expanded U.S. sanctions will not likely halt Russia’s Nord Stream 2 (NS2) natural gas pipeline, according to Uniper, but management has warned investors that the chances of delays have increased.

In 2017, Uniper was among five European companies that agreed to provide long-term financing for 50% of the estimated $11.8 billion project, with Russian state-controlled gas company Gazprom providing the rest.

Uniper CEO Andreas Schierenbeck, speaking during a second quarter conference call earlier this month, said in a “worst-case” scenario the pipeline “would never be finished.” The question would be, “can we get our money back or not? But that’s a thing to be seen at the moment. I don’t expect that scenario…I think we underlined that probably with all the other financial investors of that project.”

In a last-ditch attempt to stop construction of the 745-mile, 5.3 Bcf/d line that would traverse the Baltic Sea from Russia, to Greifswald, Germany, the Trump administration last month unveiled a plan to potentially sanction companies that participate in the project.

The U.S. Department of State plans to remove a clause that previously grandfathered NS2 from the 2017 Countering America’s Adversaries Through Sanctions Act (CAATSA). The act, imposed during the Obama administration, would allow the United States to impose sanctions against NS2 participants that do not wind down investments.

Secretary of State Mike Pompeo said the pipeline, which has significant investment from European companies, needs to be stopped because it would strengthen Russia’s stranglehold on the European Union (EU), which relies on Russia for about half of its gas imports of 340 billion cubic meters/year.

The Trump administration has touted U.S. liquefied natural gas as crucial for curbing Russian influence, and NS2 likely would reduce European demand for domestic imports.

Twenty-four of 27 EU member states filed a complaint with the State Department over the use of sanctions to influence American foreign policy goals, Bloomberg reported, citing an unnamed European diplomat.

Uniper management does not expect the line to be stopped, but “the probability of a delay or even noncompletion is increasing.” The NS2 consortium is “working to mitigate the effects of the currently still suspended pipelaying activity and to bring the project to completion.”

European countries that would receive gas from NS2 have said the project is necessary to lower prices and provide security of supply. Gas transit through Ukraine has previously been cut in cold winter months because of disputes with Russia.

“A completion of the project receives strong political support from several country governments as well as the EU,” Uniper management said. If the project is not built Uniper indicated it may need to impair the loan and forfeit planned interest income.

Uniper said it earned around $49 million in interest in the first half of 2020 from the NS2 financing loan, compared with $39 million) in the first half of 2019.

Before the U.S. policy change was announced, the pipeline was expected to be completed by 2021. Many experts still expect it to be completed.

Republican Sens. Ted Cruz of Texas, Tom Cotton of Arkansas and Ron Johnson of Wisconsin ratcheted up tensions earlier this month in a letter to Fährhafen Sassnitz GmbH, which operates Mukran Port in Germany. They warned of “crushing legal and economic sanctions, which our government will be mandated to impose” if the company does not cease cooperating with Russia’s Gazprom in NS2. The small port houses two pipe-laying vessels that Gazprom plans to use to complete NS2.

In addition to removing the grandfathering clause in CAATSA, the senators cited the National Defense Authorization Act (NDAA) signed into law in December. Among other things, the act requires the president to impose sanctions on foreigners involved in providing pipe-laying vessels for NS2.

In July, the Senate passed its version of the NDAA for fiscal year 2020, which also would require sanctions against companies that “facilitate providing vessels for such activities, or that provide insurance or certain services for those vessels.”

German Foreign Minister Heiko Maas earlier this month reportedly told Pompeo of his “dismay” over the senators’ threat, according to the Associated Press.

MOSCOW, August 31. /TASS/. Gazprom supplied 1 bln cubic meters of gas in the Q2 to China via the Power of Siberia pipeline at prices significantly higher than European, Head of Gazprom's Financial and Economic Department Alexander Ivannikov said during a conference call with investors.

"It is also worth noting that in the second quarter, Gazprom supplied about 1 billion cubic meters of gas to China via Power of Siberia gas pipeline at prices that significantly exceeded European prices. As the volume of gas supplies under the CNPC contract grows, the Chinese market will provide a more significant contribution to Gazprom's revenues and profits," Ivannikov said.

GarryB wrote:Russia needs to be proactive... cancel Nord Stream II and redirect the pipes to deliver their gas to Kaliningrad... let them enjoy cheap gas supplies. They could set up liquification facilities there and load up ships with Russian LNG (liquified natural gas) which they can ship to Germany for 3-4 times the price they would have been paying for gas that is piped... it will still be cheaper than freedom gas from the US and they should have more than what they need... unlike the American sources...

GarryB wrote:Russia needs to be proactive... cancel Nord Stream II and redirect the pipes to deliver their gas to Kaliningrad... let them enjoy cheap gas supplies. They could set up liquification facilities there and load up ships with Russian LNG (liquified natural gas) which they can ship to Germany for 3-4 times the price they would have been paying for gas that is piped... it will still be cheaper than freedom gas from the US and they should have more than what they need... unlike the American sources...

NS2 capacity of 55 bcm per anum is severe overkill for the population and industry of Kaliningrad

I think they already have enough gas there as per their requirement.

Setting up LNG plant at Kaliningrad to resell the gas of NS2 would require billions of dollars of investment, plus if that gas has to be sold as LNG, it would be much wiser and cheaper to build the LNG plant right at Saint Petersburg or Ust Luga.

That being said, I think its pretty obvious now that Germany is not going to abandon NS2.

NS2 is probably going to be a bit more delayed but ultimately Germany is going to get that gas.

Also, I do believe that NS2 is most probably the very last gas pipeline Russia has built to Europe. All the future pipelines would be going towards east.

So let me get this straight, cancel the deal which Russia would be in violation of, Germany has kept its end of the deal.

Tell the Germans "hey we are doing this pay us 4x the price of the gas or FU because screw deals, we wanna boost our income"

You are becoming more American every day.

What you have suggested is literally what we do.

But it's okay if Russia does it right? but if the US does it you complain and complain and complain.