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

Russia and Iran shock the world with a gas alliance, by Olga Samofalova for VZGLYAD. 06.08.2023.

Russia decided to unite with a direct gas competitor.

Russia can take part in the creation of not only the Turkish gas hub, but now also the Iranian gas hub. However, Russia's help in bringing Iranian gas to the world market looks strange from an economic point of view. Iran is the second largest owner of gas reserves in the world after Russia, and Iranian gas is a direct competitor to Russian. However, there are examples of successful associations of the main rivals for the sake of one goal in the world.

Iran plans to create a gas hub with the participation of Russia, Turkmenistan and Qatar in the industrial region of Asaluyeh in the southern Iranian province of Bushehr, located on the coast of the Persian Gulf. This was announced by the Minister of Oil of the country Javad Oudzhi. His words are quoted by the Tasnim agency.

The region is home to the production center of the world's largest oil and gas field North-South Pars. Gas reserves amount to 28 trillion cubic meters of gas plus 7 billion tons of oil.

A few weeks ago, in May, a Russian delegation led by Deputy Prime Minister Alexei Novak visited Iran. Then a number of bilateral agreements were signed, but the content of many was hidden. As for gas, it was about swap gas supplies to the north of Iran for 10 billion cubic meters of gas at the first stage, which can be transformed into a gas hub project. Plus, the development of oil and gas fields in Iran was discussed.

There are no specifics on the gas hub in Iran yet. “Probably, we are talking about the fact that Russian and Turkmen gas will come to Iran, mix with Iranian gas and some other and change ownership. Here the buyer will pick it up. There is an example of the famous Baumgarten gas hub in Austria, a discussed gas hub in Turkey. This can be both an electronic exchange and long-term contracts, which will specify the point of transfer of ownership of gas in Asaluya, ”says Igor Yushkov, an expert at the Financial University under the Government of the Russian Federation and the National Energy Security Fund.

But then there are many questions. One of them is where the gas will go from the Iranian hub, who will buy it there? Two directions can be distinguished: to the west - to Europe, or to the east - to India.

Deliveries in the western direction look doubtful. “Firstly, it is not clear why Russian gas should make such a detour - gas pipelines through Central Asia to Turkey and further to Europe. This is irrational,” Yushkov said. Moreover, it is more logical for Russia to transport Russian gas directly to Turkey, which is already happening.

Secondly, Turkey is unlikely to approve the arrival of a competitor and may not let the gas coming from the Iranian hub, because Turkey itself wants to be a gas hub for the Europeans.

Thirdly, it is unprofitable for Russia itself to help Iranian gas to come to Europe. Our gas deliveries to Europe have declined, but they continue, including through the Turkish Stream.

Therefore, it is more expedient for the Iranian hub to consider the eastern direction.

“There is no competition in the East. And this direction provides an opportunity to enter the Pakistani and rapidly growing Indian market. Neither Turkmenistan, nor Russia, nor Iran are represented in these gas markets. For us, this is also an attractive story.”, Yushkov says.

Here new questions arise. First, is India ready to come to Iran and buy gas here. Second, how exactly will this gas be transported to India?

On the one hand, the Indian economy is growing, which means that the consumption of hydrocarbons is growing. Another thing is that Delhi may not want to invest in infrastructure for the delivery of this gas from the Iranian hub.

There are two options for delivering gas here - thronugh a pipeline through Pakistan or in the form of LNG by sea.

Yushkov recalls that when it came to the NAPI gas pipeline to Pakistan and India, in addition to unsafe Afghanistan, there was also a problem in India. Delhi wanted to buy gas on its border, and offered to lay pipes to others. As a result, the NAPI project failed.

If India agrees to take gas from the Iranian hub, then the question will arise how to deliver it - by land or by sea. The land route is through pipes in transit through Pakistan. The expert considers this option to be the most realistic. The second way - to deliver gas by sea in the form of LNG - is much more complicated.

First, so far only Western companies have the technology to build a large-capacity LNG plant. Iran does not have them, Russia only has the technology of a small-scale LNG plant.

Secondly, if we assume that in 7–10 years Russia will still have its own missing technologies for building large-tonnage LNG plants, it is not clear why it would build them in Iran. Do not forget that Iran is the country with the largest gas reserves after Russia in the world, that is, it is a direct competitor to Russian gas.

According to Yushkov, if in the future Russia can build large-capacity LNG plants and gas carriers on its own, then it is more logical and economically feasible to build such plants on its own territory than to haul gas so far to Iran through pipes and then liquefy it for delivery to India.

Russia can put factories on the same Yamal and transport them by sea to India. If there are problems with ice-class tankers, then it is possible to build LNG plants in the non-freezing sea, for example, in Murmansk, stretching gas pipelines there through its own territory, the expert argues.

Here are some pluses. Firstly, these are investments in their own territories, the creation of workers and tax deductions within the country. Secondly, it will be economically more profitable, Yushkov believes, since LNG was invented specifically to transport gas over long sea distances. The most expensive thing with such a delivery is just the liquefaction and liquefaction of gas, in comparison with which transportation by sea costs a penny.

On the whole, cooperation between Russia and Iran, the two largest gas players in the world, in the gas sector looks strange. These are two competitors who benefit from developing their projects on their own. Why would Russia make Iranian gas strong and ubiquitous? Perhaps the benefit is classified and lies outside the gas sphere. Another option is that both strong players are thinking of uniting in order to increase their power and influence on the global gas market.

“I think that all the talks are conducted in order to demonstrate that Russia and Iran with other gas players are going to create a gas OPEC. Therefore, be afraid and negotiate with us now, separately, before this happens. This is an attempt to pump their negotiating positions.

When Novak recently traveled to Iran, there was just a lot of talk about the gas OPEC,” the FNEB expert does not exclude.

For example, Russia still has not signed a commercial contract to supply gas to China via the new Power of Siberia-2 gas pipeline. Its construction will begin only after the signing of such an agreement, and China is delaying it, knocking out a discount. And Russia, as you know, lost the export of 130 billion cubic meters of gas per year due to problems in the European market. And at least some of these volumes need to be attached.

“The Iranian gas hub is still a fantastic project. While everything is at the very initial stage. It is not certain that this project will come to fruition. And if it comes, then this is the prospect not of the 2020s, but of the 2030s,” concludes Igor Yushkov.

https://vz.ru/economy/2023/6/8/1215615.html

India announced plans to bring oil supplies from Russia to 30% of the total, by Alexey Degtyarev for VZGLYAD. 06.17.2023.

The Indian side intends to increase the supply of Russian oil, its share is planned to be increased to 30% in the next year in the total volume, Vinod Kumar, Executive Director of Indian Oil, said at SPIEF.

India's energy consumption is a third of global consumption, so there is "huge potential" to increase supplies, Kumar said, RIA Novosti reports.

Experts expect an increase in demand for oil, gas and gasoline, the supply of crude oil will only increase, and Russia will play a major role in this, he added.

In 2021-2022, the share of crude oil imports from Russia was less than 2%, but in 2023 it increased to 20%, in the period 2023-2024 it should reach 30%, the company representative said.

In May , it was reported that in India, oil imports from Russia in the 2022-2023 financial year increased 14 times, to $31.02 billion.

https://vz.ru/news/2023/6/17/1217068.html

Russia overtakes U.S. to lead diesel exports to Brazil: Brazilian media, 06.17.2023.

Brazil has firmly maintained its position as Russia's number one trading partner in Latin America since 2010. Over the years, bilateral trade indicators have been steadily rising.

Russia has become the largest exporter of diesel to Brazil, surpassing the United States, according to Ancelmo Gois ' column in O Globo.

In Brazil, 22% of the diesel consumed needs to be imported and half is coming from Russia. The price is 15% to 20% cheaper than fuel coming from the North American country.

This was clearly evident in the meetings during the St. Petersburg International Economic Forum (SPIEF).

During the open session between Brasilia and Moscow, the parties exchanged views on closer cooperation between the countries, which, in the conditions of collective sanctions of Western countries, only expanded the opportunities for Commodity Exchange, as reported.

The head of the trade, investment and agribusiness sections of the Brazilian Embassy in Moscow, Hugo Lins Gomes Ferreira, exclusively told Sputnik yesterday (16) that Brazil-Russia trade may break the 2022 record.
Ferreira also stated that Russian companies are increasingly interested in going to Brazil and making investments, and that in particular, there is a growing interest on the part of Russian fertilizer companies.

Yandex Translate from Portuguese

https://sputniknewsbrasil.com.br/20230617/russia-supera-eua-e-passa-a-liderar-exportacoes-de-diesel-para-o-brasil-diz-midia-brasileira-29261652.html

European Union continues to buy LNG from Russia despite U.S. pressure, 06.18.2023.

European Union member states continue to buy large volumes of liquefied natural gas from Russia, French oil and gas company TotalEnergies told the media.

The European Union (EU) is importing liquefied natural gas (LNG) from Russia despite US pressure, Patrick Pouyanné, director of French oil and gas company TotalEnergies, said in an article on Saturday (17).

"We have a 20-year contract with Russia. If we do not accept this gas, we will have to pay for it anyway. The day the Europeans decide to sanction Russian gas, we will be able to invoke the 'force majeure clause' and stop overnight. For now, the European Union is telling us to move forward despite American pressure," Pouyanne told French newspaper Le Journal du dimanche.

He said EU countries imported 15 million tonnes of LNG from Russia in 2022, about a sixth of their total needs of 100 million tonnes.

He said it would be difficult for the company to explain to European consumers why they would have a shortage of gas next winter, at the end of the year, if the consortium abruptly stopped supplies.

Germany has recently been planning to open an LNG terminal linked to the Nord Stream pipeline.

https://sputniknewsbrasil.com.br/20230618/uniao-europeia-segue-comprando-gnl-da-russia-apesar-da-pressao-dos-eua-29274038.html

Good to see that the South Korean shipyard did not fall into the sanctions nonsense. They just claimed the ships had already been delivered before the sanctions hit. Oh hum.

This way they got their money and their customers got their ship.

These ships will significantly increase the amount of LNG that Novatek will be able to carry with less ice resistant ships. The whole point is to put these FSUs at the limit where you can just use regular non ice resistant LNG tankers to travel to the final client. So they only use the ice resistant tankers to fill these large FSUs, and then non ice resistant tankers can be used the rest of the way.

Deliveries of Russian oil to India hit another record, 07.03.2023.

Kpler: In April, Russia supplied India with 2.2 million barrels. oil per day.

In June, India imported 2.2 million barrels of oil from Russia. oil per day, analysts at Kpler said. Deliveries are growing for the tenth month in a row. Experts assume that growth will stop next month.

Deliveries of Russian oil to India in June reached a new record: last month they amounted to 2.2 million barrels. per day, according to Bloomberg , citing Kpler's leading oil analyst Victor Katona.

In May, India imported 1.96 million barrels. Russian oil per day, which is 15% more than the April maximum. According to Kpler, in the last month of spring, Russian oil accounted for 46% of India's total oil imports.

Deliveries from Russia are growing for the tenth month in a row, they again exceeded the total imports of raw materials into the country from Saudi Arabia and Iraq (for the first time, the excess was recorded in early May). In June, according to analysts, Riyadh supplied New Delhi with 745 thousand barrels. oil per day, and Baghdad - 835 thousand.

https://www.rbc.ru/business/03/07/2023/64a235189a7947bcbdd1864c

Olga Bazova
@OlgaBazova
·
9h
The story of Finnish gas independence from Russia in two parts.

Brent crude oil index went over $81 USD. And Russian Urals crude oil index went over $60 USD per barrel. Over the price of the so called Western sanctions again. Siberian ESPO and Sokol oil, traded in the Far East, went over $70 USD per barrel.

https://tass.com/economy/1647003

Russia can change to domestic index in oil tax calculations — Finance Ministry
"We will progress to a Russian non-exchange index increased by $4 a barrel; this reflects the cost of supply," Aleksey Sazanov added

MOSCOW, July 14. /TASS/. Russia can change to a national non-exchange index when computing taxes for the oil sector since 2024, Deputy Finance Minister Aleksey Sazanov said on Friday.

Taxes are being calculated so far on the basis of the Urals price calculated by the Argus agency on the CIF basis in European ports, Sazanov said. However, Argus will stop posting this price since January 1, 2024, he noted.

"We will progress to a Russian non-exchange index increased by $4 a barrel; this reflects the cost of supply. And to the calculation of the Brent minus $20 [for the Urals] from September 1, 2023," the official said.

This is retarded. Sure the difference between Urals and Brent is roughly $20 USD right now when Brent is at $80 USD. But making it fixed is totally retarded. I would just charge the tax as if the oil was priced just like Brent, and lower the oil tax rate. There are just too many shenanigans and rumors of people bullshitting with false claims of oil sales at low prices to make money on the side which then gets stashed in foreign accounts. i.e. the same shit which Yukos used to do. Using Brent as the benchmark would just nerf that.
Russia also needs to expand its own oil tanker fleet ASAP. And I do not mean just the shadow fleet but also Rosneftflot and Sovcomflot.

Is this the right thread for this?

Wow!

Iran Observer
@IranObserver0
·
21h
Currently, there are less than 10 major turbine manufacturing companies in the world, including GI, Siemens, and Mapna that manufacture gas and steam turbines — Mapna official

● Iran broke Western monopoly by replacing 40 Siemens gas turbines in Russia with Mapna gas turbines

Those are Iranian clones of Siemens gas turbines.
https://etn.global/gas-turbine-products/mgt-70/

I guess it is one way to get a necessary product in exchange for the exports of food that Russia sends to Iran.

But I think this is too critical of an infrastructure to import. Who knows what will happen with Iran in the future.

China registers record import flows of Russian oil and coal, says media, 07.20.2023.

Russia's imports of key commodities for the Chinese energy sector hit all-time highs last month, highlighting the growing partnership between the two nations even in the face of the Ukrainian conflict.

Russia's imports of thermal coal and coking coal — derived from bituminous coal — rose to 10.6 million tonnes in June, above the combined total of Indonesia and Mongolia, the other top exporters to China, according to customs data released on Thursday. Also according to the media, in the same month, oil flows from Russia reached 10.5 million tons, an increase of more than 40% compared to the previous year.

Asia's largest economy has seized the opportunity that Western sanctions have fostered to buy even more oil and coal from Moscow, as Western buyers are barred from shipments due to the Ukrainian conflict. Since the start of Russia's special military operation in Ukraine, China has maintained friendly ties with Moscow by refusing to adhere to U.S.-led sanctions and calling for a diplomatic way out of the conflict.

In coal trade, Russia since mid-May has boosted transportation along the trans-Baikal Railway, which connects to China's border city of Manzhouli in Inner Mongolia. In addition, there are plans for another rail route to the northeast of Mohe in Heilongjiang, according to the Chinese consultant GRCoal Research Institute.

Russian oil continues to flow to Europe

According to data from the company Vortexa, cited by Der Tagesspiegel in April, India for the first time imported more oil from Russia than from its former main suppliers, Saudi Arabia and Iraq, combined: 1.7 million barrels per day.

Since December 2022, the European Union (EU) has maintained an embargo on Russian oil shipped by ship. In addition, since February, the import of petroleum products from Russia, such as diesel and gasoline, has also been prohibited. The Finnish think tank Centre for research on energy and Clean Air (CREA) considers, however, that this embargo is being circumvented with the help of third countries such as India.

In addition to India, the organization also points out that China, Turkey, the United Arab Emirates and Singapore wash Russian oil. In total, its deliveries of oil products to Western sanctioning countries increased by almost € 19 billion (about R$ 94 billion) in a year after the start of the Ukrainian conflict, which began on February 24, 2022.

Yandex Translate from Portuguese

https://sputniknewsbr.com.br/20230720/china-registra-fluxos-recordes-de-importacao-de-petroleo-e-carvao-russos-diz-midia-29648677.html

GarryB wrote:They would buy them from Iran for now while developing their own replacements... but use the Iranian models to take the pressure off getting new large turbines into service any time soon.

Or maybe Russia could work with Iran to create a local production facility for such turbines. While Russia could just probably do it themselves, this is already done and it can give incentive to Iran to cooperate even more with Russia. Such investments could bring lots of money for Iran and Russia both.

GarryB wrote:Russia already has production of various sizes of turbines and just lack the largest sizes... which is going to be corrected shortly as they get PD-35 (a 35 to 50 ton monster) into serial production, which should replace the old models the Iranians are producing for themselves because the west has imposed sanctions on them.

Russia can buy Iranian made turbines till the Russian turbines are ready, and when they are perhaps Russia could continue to buy some Iranian turbines for jobs where newer Russian turbines would not be needed. Equally Russia could licence produce some jet turbines in Iran that Iran might find useful for local pipelines or aircraft or other domestic purposes like ship propulsion or power generation.

Iranian engineers might be able to contribute to the development and both sides could benefit.

I has been mentioned that Egyptian engineers developed a more efficient dust filter for the Abrams tank than the Americans were using... a clever engineer is a clever engineer no matter where they were born... part of the success of the US is all those engineers with foreign sounding names they have working for them who come from all over the world to work there...

All the OPEC countries can work together to develop alternatives to Western technology for their oil and gas industries. They can further work on developing innovative methods and technologies for the energy sector.