Russian Oil and Gas Industry: News #3

His enemies in Kiev wont give him any credit, but it will make it rather more clear who the bad guys really are.

At the end of the day Russia would make more money using the new pipes simply because it bypasses a lot of transit fees, but Russia does not pay transit fees... the customer does... either way Russia will be making money so of course they will continue to use Ukrainian pipes.

It is not their most profitable option so if Kiev wants to steal or otherwise play silly buggers then it will be easy and profitable to then not move gas through those pipes, but Russia is making more off those gas sales than Kiev is so it makes sense.

The difference will be for the EU because they pay the transit fees so they will be paying Ukraine...

GarryB wrote:
The difference will be for the EU because they pay the transit fees so they will be paying Ukraine...

One day another EU country(s) will join Hungary after they realise that the net cost to them of the gas will be lower if they source it via Germany's NS1/2 distribution deal (low public profile) or Turkstream (lots of publicity), rather than Yamal or Ukraine.

Were they to buy from Germany they could say that it could be LPG or pipeline at Germany's choice.

PapaDragon wrote:

Is Russia selling this gas at current market price?

Those ordered above the existing contracts, yes.
In Poland they have already announced this price increase for retail, which makes an almost 30% hike this year, saying that last purchases are being made ith the price hike.

ALAMO wrote:

PapaDragon wrote:Is Russia selling this gas at current market price?

Those ordered above the existing contracts, yes....

Then there is no problem

Yeah, that is the best part of this story.
Bullying by the EUC to bring the contracts to the "market norms" brought a disaster.
The market norm at the moment is $1200+, while Gazprom just offered a $220-280 price range for a long-term contract to Moldova.
Wanna guess how much it is for Hungary, a 40+ year partner who is just doing business, not politics?
Me neither - I suppose it is below $200 range with the evaluation clause.
As I said, Russkies don't bother the peak income, they need a cash flow. A fair trade, that the West forgot.

It is a theatre, all along.

But seriously ...
Considering that the average price for 1kcbm in the EU was +/- 200 $, the deals Gasprom offers to the member states is actually extremely fair. They offer $220+. If we consider the inflation itself, it turns out that they want just the same as they did with the contracts ongoing.
Discussing that is simply stupid.
They are paying back some of that with reverse orders anyway, buying pipes, generators, valves ...

Vladimir Putin tells that normal Ukrainians should not be put in trouble because of actions of their government. This is why he decided to increase the volume of gas transited from Russia to Europe via Ukrainian pipelines.

https://www.youtube.com/watch?v=bXlgP5LylDY

Ukraine desperately needs money and Putin’s decision gave Ukraine hundreds of millions of USD to its budget.

Putin’s decision also helped to significantly lower the price of gas which helped to ease the energy crises that many European countries are facing now.

Will Putin’s goodwill gesture gain Russia more friends in Ukraine and Europe. Doubt it.

The old pipelines still make money... what Putin has said is that rather than do what a western company would do which is bypass the old more expensive pipes with transit fees added on, they would prefer to use their new pipelines to transfer gas to customers because it is cheaper and so they make bigger profits, that they will continue to honour agreements with the Ukraine for a minimum flow rate through the Ukraine which will cost more.

Bypassing the Ukraine is cheaper even including penalties of not meeting minimum flow levels, so Gazprom could simply pay penalties and bypass the Ukraine if they wanted to... Putin has said they can't do that and should use Ukrainian pipes to send gas to customers in the EU and don't make quite so much in profit for that transfer.

The prices of gas however means they will likely make enormous profits anyway, but as putin said that is because of the EU demanding spot prices and getting rid of long term contracts.

I don't know much about economics, but market forces like certainty and anyone can create bubbles in prices that they can then make money on by pushing prices up and then selling when the price is high... waiting for the prices to collapse again and then buying when prices are very low... and repeat.

The west thought they could get gas even cheaper from Russia by using storage capacity to buy gas when it is very cheap and then using that cheap gas when the price goes up and just wait till the price goes down when they get desperate because they are not selling gas.

The reverse is happening because now they have plenty of capacity and countries around world are trying to claw back their industry and the northern hemisphere is approaching winter so energy demands are going to increase.

It will be the same with food where the price of food is going to go up because recovery from covid lockdowns is going to boost demands and production and supply have largely stagnated.

There is a shortage of dog food here in New Zealand because quite a few ships delivering it were delayed and it has gone off... makes me wonder why we get it from overseas in the first place when we have pest problems that could be solved by using the pests for pet food....

GarryB wrote:There is a shortage of dog food here in New Zealand because quite a few ships delivering it were delayed and it has gone off... makes me wonder why we get it from overseas in the first place when we have pest problems that could be solved by using the pests for pet food....

I wasn't aware that dogs will eat liberals or LGBT activists. Maybe its just my dogs that turn their noses up. Not that I blame them...

Please stop making shit up. He is not being accommodating or trying to appease anybody, he is being fair and principled, boosting the reputation of Russia as a reliable partner that does not use energy supplies as a weapon of political blackmail.

I think Karl is right... Putin is being nice and being fair... he is showing mercy to people who hate him and his country and you can bet your ass the next bullshit made up story of Putin using Novachok to murder someone will be repeated and believed by these same people...

The point is that some recognise what  the Europeans have been to Russia who is just trying to build a pipeline to supply gas to a growing market that bypasses a country that openly steals from those pipes... despite this bullshit Putin does not want the Ukrainian people to suffer and the Ukrainian government to loose all its income... as he says, Russia provides a product and it makes so much making so much profit on the product that the customer no longer sees it as affordable and starts looking to alternative energy sources like coal.

He could stay out of it and let Gazprom choose to bypass the Ukraine and pay the fines for not meeting the minimum gas throughput because doing it that way would generate them the biggest profits, but he chooses to instruct them to be human about it... when was the last time a western leader told a western or international company to put humanity and morals and ethics before pure profit... simply they don't.  You could say western governments don't own parts of those companies like Russia owns bits of Gazprom, but considering all the bailouts... 750 billion one bailout alone for US and international banks in the US housing market... you would think that would give them leverage or shares or a spot on the boardroom till it is all paid back... did they even pay any back? I know a lot of CEOs got enormous bonuses for a few years till someone noticed and mentioned they shouldn't be getting bonuses for collapsing the economy for a while.

The point is that those who support Russia and Putin will recognise him as being reasonable and fair... which might upset some who want him to be more hard core hard line... that that will just push them to stop buying Russian gas and change to something else... the ones who hate him will likely continue to hate him because he represents a strong Russia which is what they fear no matter what he does... but people who are on the fence and around the world look at the situation and think what total the europeans are being and how reasonable the Russians are regarding this... why do we do all our business to these ass holes... why don't we trade more with Russia... they seem to want to do business and not screw others... even when they can.

I wasn't aware that dogs will eat liberals or LGBT activists. Maybe its just my dogs that turn their noses up. Not that I blame them...

You have to cook them a long time, but rinse them out first... they don't wash as much as normal people to try to save the planet...  

Funny that dog food comes in all sorts of flavours but not democrat or republican or postie (mailman)...

GarryB wrote:

Please stop making shit up. He is not being accommodating or trying to appease anybody, he is being fair and principled, boosting the reputation of Russia as a reliable partner that does not use energy supplies as a weapon of political blackmail.

I think Karl is right... Putin is being nice and being fair... he is showing mercy to people who hate him and his country and you can bet your ass the next bullshit made up story of Putin using Novachok to murder someone will be repeated and believed by these same people...

The point is that some recognise what  the Europeans have been to Russia who is just trying to build a pipeline to supply gas to a growing market that bypasses a country that openly steals from those pipes... despite this bullshit Putin does not want the Ukrainian people to suffer and the Ukrainian government to loose all its income... as he says, Russia provides a product and it makes so much making so much profit on the product that the customer no longer sees it as affordable and starts looking to alternative energy sources like coal.

He could stay out of it and let Gazprom choose to bypass the Ukraine and pay the fines for not meeting the minimum gas throughput because doing it that way would generate them the biggest profits, but he chooses to instruct them to be human about it... when was the last time a western leader told a western or international company to put humanity and morals and ethics before pure profit... simply they don't.  You could say western governments don't own parts of those companies like Russia owns bits of Gazprom, but considering all the bailouts... 750 billion one bailout alone for US and international banks in the US housing market... you would think that would give them leverage or shares or a spot on the boardroom till it is all paid back... did they even pay any back? I know a lot of CEOs got enormous bonuses for a few years till someone noticed and mentioned they shouldn't be getting bonuses for collapsing the economy for a while.

The point is that those who support Russia and Putin will recognise him as being reasonable and fair... which might upset some who want him to be more hard core hard line... that that will just push them to stop buying Russian gas and change to something else... the ones who hate him will likely continue to hate him because he represents a strong Russia which is what they fear no matter what he does... but people who are on the fence and around the world look at the situation and think what total   the europeans are being and how reasonable the Russians are regarding this... why do we do all our business to these ass holes... why don't we trade more with Russia... they seem to want to do business and not screw others... even when they can.

I wasn't aware that dogs will eat liberals or LGBT activists. Maybe its just my dogs that turn their noses up. Not that I blame them...

You have to cook them a long time, but rinse them out first... they don't wash as much as normal people to try to save the planet...  

Funny that dog food comes in all sorts of flavours but not democrat or republican or postie (mailman)...

I agree and I think Putin makes a big mistake. Unless he believes in God who will reward him and Russia for this, he will not get any rewards from the West or Ukraine. They will hate him and Russia even more.

I would like Russia to brutally use any leverage it has on Ukraine and the West to maximize benefits for Russia and hurt the West and Ukraine. But unfortunately Russia will not act like this as long as Putin is in charge.

Nazi Josep Borrell is gaining increased resonance upon EU affairs, including ones that have nothing to do with foreign policy issues.

I agree and I think Putin makes a big mistake. Unless he believes in God who will reward him and Russia for this, he will not get any rewards from the West or Ukraine. They will hate him and Russia even more.

This is where we disagree... revenge and exploitation and Russia is just the west with a different alphabet. Other countries will see the way Russia and China behave and how the west misbehaves and realise their future with the west is painted as bright and shiny but after centuries of promises the third world is still the third world being exploited by the first world.

Russia needs to do what is right and not attack the west or get revenge... eventually the west will weaken and not be able to dominate and a lot more countries will step up and grow and develop and they will know Russia is not going to screw them or try to control them or limit their development and growth and that dealing with Russia and China is a much better way to go for any country... ironically including western countries who are sick of towing a line that gets the 1% super wealthy and the rest left to fend for itself.

Eventually the west is going to realise how bad it is... whether it can change or not... well that is not Russias problem... it is the problem for the people of the west because they are the ones that ultimately suffer.

I would like Russia to brutally use any leverage it has on Ukraine and the West to maximize benefits for Russia and hurt the West and Ukraine. But unfortunately Russia will not act like this as long as Putin is in charge.

Kicking a man when he is down and he will lash out with nothing to lose... the difference is that while you could kill a man when he is down, a country is different... Ukraine is Americas bitch... just like Russia was in the 1990s... Ukraine is only a tiny fraction of Russia so it does not have the same potential to recover, but there is a path they could follow where they embrace their neighbours... Belarus and Russia who don't want them exterminated despite their attempts to exterminate Russia from their culture and history... there is a path back but I doubt any real ukrainian is interested despite it is their only chance of a decent future... Russia is not going to save them when they don't want to be saved... and for Russia not having to carry Ukraine has allowed them to turn their resources to their own ports and their own industries, so helping Ukraine is not going to be a number one priority ever again, but they are more likely to get forgiveness and brotherhood and support and a market that is interested in their products in Russia than in the EU or US.

Trying to punish them for being fooled by 30 years of western propaganda is not a nice thing to do even to a bad neighbour... because this neighbour is not moving.

And I am an Athiest so it is nothing to do with religion... these people are not going anywhere... so Russia has to learn to live with them.

Karl is misleading people with statements which are simply FALSE, because at no time Putin has said what has been reported about increasing transit or rescuing Ukraine.

Putin didn't say rescue but did talk about not making Ukrainian people suffer...

He does not give a damn about punishing the ukronazis, he cares about Russia. He is being smart where you are being hateful, I guess it is easy to realize what the superior strategy is

The western world has successfully convinced itself and the majority of people in the Ukraine that the problems the Ukraine faces are Putins and Russias fault... making them suffer will just be used to reinforce that which in no way helps Russia, and makes bs like sanctions more likely.

GarryB wrote:
The western world has successfully convinced itself and the majority of people in the Ukraine that the problems the Ukraine faces are Putins and Russias fault... making them suffer will just be used to reinforce that which in no way helps Russia, and makes bs like sanctions more likely.

I think it is the other way around.

Right now Ukrainians think they are "part of the West" and that they can integrate to the West and its institutions while demanding that Russia will still keep supporting Ukraine economically.

Ukrainians feel entitled. They feel they are entitled to receive Russian economic support and yet also are entitled to see Russia as an enemy and are entitled to join the NATO.

They are not going to feel any gratitude over Russia helping them. It will be seen as a weakness. If Russia will always keep helping Ukraine then Ukrainians will just feel that they have chosen the correct path. Ukraine can continue its integration path with the West while knowing that Russia will be paying for it and supporting Ukraine. It just proves that Ukraine is right. It proves that Ukraine chose the correct path.

But if Ukraine is to made to pay a big socioeconomic price from their choice then there is a slight chance that Ukraine will change its course, or at least make some adjustments. The current regime of Ukraine hates Russia and won't do anything to improve relations unless the circumstances force their hand. If there is a situation that a big part of Ukrainian population will literally freeze to death and the only available help could come from Russia then the regime must think of something.

But Putin makes it way too easy for Ukraine offering them help without backing them to the corner first.

For example Russia could at least demand that Ukraine will allow water supplies to Crimea as a pre-condition to any support. But I doubt the people in Kremlin will do anything like this.