Russian hydrocarbon (Oil and Gas and Coal) Industry: News #4

Russia increased its oil exports in November to its highest level since April - by 270,000 barrels a day - to 8.1 million barrels a day,
according to the International Energy Agency report.

Western sanctions work fine. 

Delivered quantities rose before oil cap started to work. Revenues were low due to steep discounts for Ural blend. As is it is, at the moment, geography works against Ural exports, especially since Druzhba almost completely stopped pumping oil to Europe. It cost about $20 to move barrel of oil from Novorosiysk to the East Asia. Unfortunately, they'll have to keep pumping oil at some of the oldest fields, because if they stop they might be stopping for good.
Without that, best solution would be to cut oil production on some West Siberian fields. Continued stupid Chinese covid lockdowns and upcoming western recession are exacerbating the problem.

I really hope so. They took it way too far. Recent visits made by Tu-95 crews to China looked more like allien invasion than military cooperation.

The EU is forced to increase purchases of liquefied gas in Russia, by Sergey Tikhonov (Sabetta - Murmansk). 12.14.2022.

Russia is ready to quickly build and assemble plants producing liquefied natural gas (LNG) on its own. From 2023 to 2026, Russia will have additional LNG production capacity for 48-54 billion cubic meters of gas. With a high degree of probability, these volumes will end up in Europe directly or through intermediaries, if only because their transportation from the Baltic and Yamal to Europe will be easier and cheaper than deliveries to the countries of the Asia-Pacific Region (APR).

The center for the construction of large-capacity offshore structures (TsSKMS) in the Murmansk region of the Novatek company has almost completed the first line of the Arkitik LNG-2 plant, and now it is being debugged. After that, she will be transported to the Gydan Peninsula in the YaNAO, where she should arrive in August 2023. Despite the sanctions, the deadlines for putting the plant into operation remained the same. The launch of the first line is scheduled for December 2023. The construction of the second (partially with Russian equipment for liquefaction of gas) and the third (fully with domestic equipment) is in full swing, and their launch is expected in 2024 and 2026, respectively. The total capacity of the plant will be 19.8 million tons (6.6 million tons for each line).

In addition to Arctic LNG-2, Novatek plans to build Ob LNG in the near future (the capacity of the plant is unknown; according to information from various sources, it can range from 2.5 to 6.3 million tons), as well as Arctic LNG- 1" with a capacity of 19.8 million tons per year. There is also Gazprom's petrochemical complex in the Baltic, which plans to produce 13 million tons of LNG per year. Taking into account the existing Yamal LNG plant and plans for the gradual commissioning of new enterprises in 2026, LNG production capacities in Russia (excluding Sakhalin-2, which is focused only on supplies to the Asia-Pacific countries) will exceed 60 million tons (83. 5 billion cubic metres).

Even our most distant plans for the transfer of export pipeline capacities to the east, like the Power of Siberia-2, will not cover even half of the losses from a decrease in the volume of deliveries to Europe. It is also not possible to count on a quick normalization of relations with the EU now, so talks about increasing exports to the West through Ukraine, resuming the operation of the Yamal-Europe gas pipeline and selling gas through Turkey are only theoretical. There remains LNG, which, due to the peculiarities of trade, in most cases has no nationality, which is proved by statistics - its supplies to Europe are already growing.

Russian pipeline gas exports to Europe have almost ceased. Pumping is still going on through Ukraine and along the European continuation of the Turkish Stream, but it almost does not reach North-Western Europe, including Germany - in the past, the main consumer of our gas. And the undermining of the Nord Streams made such deliveries simply physically impossible. Even the surviving Nord Stream 2 line cannot be launched without a thorough examination. In addition, the political mood in the EU is clearly preventing a productive dialogue on increasing pipeline supplies from Russia.

The EU countries do not have any full-fledged alternatives to replace it. There are hopes for LNG from the US and Qatar. But the Americans are still getting off with unsupported promises, and Qatar even declares that Doha has no free volumes of gas for Europe in the near future. The exception is Germany's agreement with the American company ConocoPhillips, which will supply 2 million tons per year of Qatari LNG (about 2.8 billion cubic meters of gas) to the German market, but not before 2026.

Our LNG is nearby. Of course, we can sell it to the countries of the Asia-Pacific region, but it is economically more profitable to deliver it from Yamal and the Baltic to Europe, both for us and for the Europeans.

Liquefied gas will indeed become a key tool for replacing Russian supplies to the European market, says VYGON Consulting consultant Ivan Timonin. Based on the actual dynamics, by the end of 2022, the region's LNG imports will grow by more than 60% compared to the level of 2021 - up to about 120 million tons, or 160 billion cubic meters of gas. And on the horizon of five years - taking into account the commissioning of new liquefaction capacities, as well as the growth in demand for the product in Asia and other regions - this figure will increase to about 140 million tons (195 billion cubic meters), the expert notes.

Europe has no full-fledged alternatives to replace Russian gas.

Moreover, in his opinion, most of this growth will be provided by supplies from new North American, as well as Qatari assets. In the medium term, gas production is expected to grow in the United States, provided almost entirely by shale assets: by 2025, production will increase from 966 billion cubic meters in 2021 to more than 1 trillion cubic meters, and by 2030 - to almost 1.1 trillion cubic meters. At the same time, since the prospects for growth in domestic consumption in the United States are limited, new volumes will be directed mainly to the needs of new export-oriented LNG projects, Timonin said.

But there is a nuance here. Will it be profitable for traders to supply American LNG to Europe. Prior to the energy crisis, the Asia-Pacific countries were the premium market for liquefied gas sellers.


Kirill Rodionov, an expert at the Institute for the Development of Fuel and Energy Complex Technologies, notes that gas demand in the EU will stagnate in the coming years due to the relatively low rate of commissioning of gas-fired power plants. By July 2022, only 9 GW of gas-fired power plants were under construction in the EU. For comparison, the increase in the capacity of solar panels in the EU in 2021 reached 21.4 GW, and wind generators - 10.4 GW.

It is unlikely that a non-growing market will be premium, this is possible only during periods of a sharp shortage of goods. In the long term, Asia-Pacific countries will be more attractive for traders from the US and Qatar. Periods of increased demand in Europe are, of course, possible, but gas at prices above $1,000 per thousand cubic meters is hardly a bargain for Europeans. As a result, the countries of the Old World will have to replace Russian pipeline gas with LNG supplies from Russia to the maximum, even if they are supplied by European or Chinese companies. Another thing is that we will have a gradual increase in production volumes, and EU gas will be needed in the spring of 2023.

https://rg.ru/2022/12/14/ballonami-evro.html

Russia needs to cut the f*ckers off. They are now trying to start another war against Serbia over Kosovo. Russia needs to impose
sanctions. Let them stick tubes in their collective asses and use the plentiful CH4 they are so full of.

DR Congo Invites Russian Companies to Develop Gas & Oil Fields, by Maria Konokhova for SputnikNews. 12.15.2022.

Energy is one of the main areas of cooperation between Russia and African countries with a great potential for growth. The head of the African Energy Chamber, Nj Ayuk, recently told Sputnik that Russia could play a leading role in implementing energy projects on the continent.

The Democratic Republic of Congo (DRC) welcomes the possible participation of Russian companies in the development of gas and oil fields in the country, said Joseph Kindundu Mukombo, adviser for economic affairs and communications at the DRC Embassy in Russia.

"The DRC has huge gas and oil reserves, but they are still poorly developed. In July this year, the government announced a tender for the development of 24 oil fields. We hope that Russian companies will participate in the tender. We know that Russia has great expertise and technology in this area," he stated, speaking at the plenary session of the 20th international forum "Gas of Russia 2022: Turn to the East."

According to him, Kinshasa hopes cooperation with Russia will eventually lead to the DRC exporting its gas and oil to other countries. However, he underlined that this requires infrastructure development, with which Russia could also help by providing investments and technical assistance.

“As for gas, we have great potential, but it must be developed first. We would like Russia to help us for the benefit of both sides. There is a large territory in the center of the country that needs to be explored, and the DRC is open to cooperation with Russian companies,” the adviser said.

Mukombo explained that the DRC wants experts in the oil and gas sectors who have expertise in transporting energy carriers, to provide assistance, as the country has “limited access” to the sea, while gas fields are located in the center of the continent.

He added that apart from the gas transportation infrastructure, the Central African country also needs gas storage facilities.
"We know that Russia is a powerful country that is competent in building gas pipelines and storage facilities. Our cooperation will allow us [the DRC] to produce, transport, store and export energy resources,” concluded the diplomat.

Earlier, Oleg Ozerov, ambassador at large of the Russian Ministry of Foreign Affairs, stated that energy security will be raised at the second Russia-Africa summit scheduled for July 2023. According to him, the summit is expected to give a new impetus to Russian-African cooperation in areas of mutual interest, including energy, science, investment and trade.

https://sputniknews.com/20221215/dr-congo-invites-russian-companies-to-develop-gas--oil-fields-1105492405.html

India to remain biggest buyer of Russian oil – Reuters

The country’s share of imports may exceed 70% of all loadings this month as EU buyers shun Russian crude.

India is expected to remain the top importer of Russian Urals crude oil in December for the second consecutive month, Reuters reported on Saturday, citing Refinitiv data and traders.

In November, the populous nation accounted for about 53% of the total tanker shipments of the grade, marking an all-time high.

India’s share of Russian crude exports and volumes purchased will increase month-on-month, despite a shorter loading plan for Russia’s western ports, traders told the news agency.

In December, market participants expect India’s share to top 70% of total loadings.

According to four market sources cited by the media outlet, India, the second-biggest consumer of oil in Asia, has been purchasing Urals crude at bigger discounts this month. It has paid well below the $60 per barrel price limit for Russian sea-borne oil set by the EU, G7 nations and Australia earlier this month.

The number of countries buying Russian Urals crude – one of the most popular grades as a result of the short trading cycle, cheap shipping and attractive refinery yields – is forecast to fall to just four, according to data from Refinitiv Eikon cited by Reuters.

India has taken at least two million tons of the grade since the beginning of the month. Bulgaria, which managed to obtain an exemption from the EU oil ban, is expected to become the second-largest buyer of Urals crude in December, shipping up to 800,000 tons.

Shipments of Urals blend oil to China will reportedly remain low with only one shipment of 140,000 tons sent as of December 16. However, traders expect more Urals to be exported to China by the end of the month. Meanwhile, Turkey, which has been actively buying Russian oil this year, has purchased just one December shipment of 140,000 tons.

https://www.rt.com/business/568424-india-top-buyer-russia-oil/

https://www.rt.com/business/568567-eu-countries-order-russian-oil/

EU countries order more Russian oil – Transneft

The crude sent through the Druzhba pipeline does not fall under the EU embargo

Germany and Poland have requested pipeline oil deliveries from Russia for 2023, the head of state oil supplier Transneft, Nikolay Tokarev, said in an interview with Russia 24 TV on Monday.

Both countries had previously said they would give up pipeline supplies of Russian oil by the end of the year.

According to Tokarev, Warsaw expects to receive 360,000 tons of Russian crude this December and 3 million tons more in 2023. He added that Berlin has also placed an order for the first quarter of next year, but did not specify the volume requested.

In November, reports emerged that Poland intended to push for EU sanctions against the northern string of the Druzhba pipeline, through which both Poland and Germany receive Russian oil, to obtain the legal grounds for unilaterally terminating existing contracts with Moscow without penalties. Poland’s largest oil refiner, Orlen, has a contract with Transneft for 200,000 tons of oil per month, which expires in December 2024. Earlier this year, Berlin also said it would stop purchasing oil via Druzhba on December 31.

“They announced that they would not take oil from Russia as of January 1. However, we have already received requests to pump it through the Druzhba pipeline from Poland and Germany next year,” Tokarev stated.

Russia and India are fundamentally moving away from the dollar and the euro in mutual trade and switching to national currencies and will create an independent tanker fleet-Russian Foreign Ministry

The advantages of creating a single fleet: 

The purchase price of oil for Asia will allow the Indians to take over the rental and insurance coverage.


India will be able to buy oil and oil products from Russia without any restrictions.


Asia will separate itself from Western ship insurance and gain independence from financial and transport services.

Regarding some "investigation" into the terror act against NSI and NSII, a new law will come into effect in Sweden in some days. 

https://www.rt.com/business/568783-russia-gas-price-cap-eu/

Russia sets its own gas-price cap for EU

Russia will redirect gas production and supplies from the West, says Russian Deputy Prime Minister, 12.24.2022.

Moscow will focus on Asian markets despite calls from the European Union (EU) to increase supply, Deputy Prime Minister Aleksandr Novak says.

Russian gas is still in high demand in the EU despite the bloc's latest sanctions on the country's energy exports, but Moscow intends to divert trade flows elsewhere, Deputy Prime Minister Novak said on Friday.

In an interview with the Russia24 channel, he noted that "European colleagues are constantly asking us to increase supplies" through existing infrastructure, such as the TurkStream or Blue Stream pipelines and the Ukrainian gas transportation system, adding that the European market remains relevant for Russia.

But given the current "political climate" in the EU to reduce its dependence on Russian gas, Moscow is looking to other markets to redirect supplies, the deputy prime minister noted.

"Because our gas is in demand, it is cheap, we have large reserves and we will develop these areas," he added.

Russia will diversify trade flows by increasing liquefied natural gas (LNG) supplies and piped gas deliveries to China, making Asia one of its top destinations, Novak said, adding that the country has increased LNG production more than threefold.

"If earlier only 11 million tons [of LNG] were produced in Russia, Today there are already four plants operating, with a total capacity of 36 million tons," the minister stressed.

In the next three or four years, Russia should increase LNG production to 60 million tons, and then raise the figure to 100 million tons annually, Novak projected.

He also recalled that, along with increasing supplies through the Power of Siberia pipeline, Russia and China have an agreement to build gas infrastructure with the capacity to deliver an additional ten billion cubic meters annually.

Yandex Translate from Portuguese

https://sputniknewsbrasil.com.br/20221224/russia-vai-redirecionar-producao-e-fornecimento-de-gas-do-ocidente-diz-vice-primeiro-ministro-russo-26610852.html

Novak warns of gas shortage in Europe due to sanctions, 12.25.2022.

Deputy Prime Minister Novak: EU sanctions provoke a long-term crisis and a gas shortage in the region.

This year the Europeans had to cut their gas consumption by 40-50 billion cubic meters. m due to the closure of enterprises for the production of fertilizers, gas chemistry, metallurgy and "this is just the beginning," said Novak.

The EU's decision to impose a gas price ceiling and other sanctions are provoking a long-term crisis and gas shortages in the region. This was stated by Deputy Prime Minister of Russia Alexander Novak in an interview with TASS .

According to him, the decision to impose a ceiling on gas prices shows that the EU authorities are "not guided by economic sound calculation", but "flirt with their voters", receiving momentary political benefits, but not economic ones.

“If we talk about long-term prospects, then with such decisions they provoke a deep long-term crisis, destabilization in Europe,” he noted.

Novak pointed to the limited resources and short-term growth of gas production in Norway and the UK, and added that LNG supplies to the EU could be unstable.

https://www.rbc.ru/economics/25/12/2022/63a871b89a794705afacd7d1

A pivot of Russian gas away from Europe will cause shortages and suffering for the whole continent. Because they have to endure freezing temperatures during wintertime they'll have to continue importing Russian gas. With the negative decision of Russia to accept gas price caps, this will cause the enhancement of gas black market there, thereby developing what the USSR experienced in the past due to fixed price controlling: shortages and black market, together with rising costs of living for the population.

AZ
@AZgeopolitics
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14m
From January 1, Ukraine will increase tariffs for oil transportation on its territory by 18.3%

The tariff for pumping through the Ukrainian section of the pipeline in the direction of Slovakia and Hungary will be increased by €2.1 to €13.6 per ton.

As any proper company would do.

AZ
@AZgeopolitics
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4h
"Nord Stream AG", the operator of the Nord Stream gas pipeline, is working on estimating the cost of repairing gas pipeline pipes and resuming gas supply"-New York Times

Russian deputy PM: European gas prices 'will remain high due to energy shortage', 12.26.2022.

The cost of gas in Europe will remain high in the near future due to the shortage of energy, predicted the Russian deputy prime minister responsible for the energy sector, Alexandr Novak. He explained that prices will not be able to return to the levels of the beginning of 2021, when gas cost between 200 and 250 dollars per 1,000 cubic meters.

Alexandr Novak stressed that the dynamics of prices will depend on winter temperatures. However, he does not see anything in the short term any reason why the cost of gas could go down. The Russian deputy prime minister also noted that the general energy price situation is, in his opinion, very unstable and suggested that in the case of oil and gas this trend will be maintained in 2023.

"At the moment we notice a tendency to instability. As for oil, the price can vary from 65 to 130 dollars per barrel. In the case of gas, the situation is similar. The price reached $4,000 per 1,000 cubic meters, now it's around $1,000," the senior official explained.

This is happening at the same time that Russia is experiencing new challenges every day and coping with them, as Western countries impose more restrictions. However, all these sanctions also affect Western countries, since inflation is growing and economic development is slowing down there, the politician specified.

He added that anti-Russian sanctions may have caused the gas price to rise and recalled that an embargo on Russian oil products to Europe will come into force in February 2023, after which diesel prices could change. Therefore, the deputy prime minister added, Russia will try to divert gas to new markets, while Europe is constantly being asked to increase supply through existing gas pipelines. In addition, he explained that the European market is important, but countries remain determined to reduce dependence on Russian supplies.

"There is a demand for our gas"

The volume of gas sent to the EU was 19.4 billion cubic meters in the first 11 months of 2022 and has increased, Novak said. He also highlighted the stable requests for fuel from European countries and stressed that "today we can say with confidence that there is a demand for our gas."

"Therefore, we continue to rate Europe as a potential market for our products. Even now this market is not closed. For example, this year we have managed to significantly increase the supplies of liquefied natural gas [LNG] to Europe, up to 19,400 million cubic meters in the first 11 months of 2022 and 21,000 million cubic meters are expected by the end of the year," he declared.

In his words, this growth occurs despite a large-scale campaign against Russia and "acts of sabotage" against the Nord Stream gas pipeline. The deputy prime minister also stated that his country is ready to supply Yamal gas through the TurkStream in order to avoid a shortage of this hydrocarbon in Europe.

As Novak stressed, TurkStream currently supplies 42 million cubic meters of gas per day, a third of the contracted volume. The official also announced that Turkey intends to create a centre that will serve to increase fuel supply to Europe.

Yandex Translate from Spanish

https://sputniknews.lat/20221226/vice-primer-ministro-ruso-los-precios-europeos-del-gas-seguiran-altos-por-la-escasez-de-energia-1133964459.html

One of Novak's comments has grown legs.

With Germany and Poland being at odds with each other and Poland refusing to let Yamal gas through, this will be petrol on the fire when Germany runs out of gas in a couple of months.

Russia Willing To Resume Gas Supplies To Europe Via Yamal Pipeline

Monday, Dec 26, 2022 - 09:30 PM

By Charles Kennedy of OilPrice.com

Russia has said it’s willing to resume natural gas supplies to Europe through the Yamal-Europe Pipeline. The Yamal-Europe Pipeline usually flows westward but has been mostly reversed after Poland turned away from buying from Russia in favor of drawing on stored gas in Germany.

"The European market remains relevant, as the gas shortage persists, and we have every opportunity to resume supplies. For example, the Yamal-Europe Pipeline, which was stopped for political reasons, remains unused" TASS has cited Russian Deputy Prime Minister Alexander Novak as saying. 

Previously, state-owned gas producer Gazprom revealed that it expected to pump 43 million cubic meters of gas per day to Europe via Ukraine through Sudzha. Unfortunately, the pipeline blew up during planned maintenance work near the village of Kalinino, about 150 km (90 miles) west of the Volga city of Kazan. 

To put the size of the pipeline in context, its run rate is a tiny portion of the 155 billion cubic meters of natural gas that Europe imported from Russia in 2021. Europe has managed to stockpile huge volumes of natural gas for the winter season, so much so that prices have tumbled sharply in recent months.

Whereas supplies of Russian pipeline gas - the bulk of Europe’s gas imports before the Ukraine war - are down to a trickle, Europe has been hungrily scooping up Russian LNG in the meantime. The Wall Street Journal has reported that the bloc’s imports of Russian liquefied natural gas jumped by 41% Y/Y. Novak has revealed that in the 11 months of 2022, Russian LNG exports to Europe increased to 19.4 bcm, with the figure expected to hit 21 bcm by year-end.

“Russian LNG has been the dark horse of the sanctions regime,” Maria Shagina, research fellow at the London-based International Institute for Strategic Studies, told WSJ. Importers of Russian LNG to Europe have argued that the shipments are not covered by current EU sanctions and that buying LNG from Russia and other suppliers has helped keep European energy prices in check.



https://www.zerohedge.com/commodities/russia-willing-resume-gas-supplies-europe-yamal-pipeline