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

Russia increases oil supply to China in the first half of 2024, 07.20.2024.

Moscow sent 55.122 million tons of crude oil worth $32,807 million to China in January-June 2024, according to data published by the General Administration of Customs of China.

This is happening against the background of the West's attempts to isolate Russian energy resources from world markets.

Thus, the increase in shipments for January-June 2024 was 4.81% year-on-year, when Moscow sold 52.590 million tons of crude oil to Beijing worth 28,349 million dollars. In June, Russia exported 8.43 million tons of oil worth $4,914 billion to China.

For comparison, China imported a total of 275,484 million tons of crude oil in January-June 2024. In terms of prices, the purchase of oil abroad cost Beijing 167,390 million dollars, according to customs data.

Russia has been one of the main suppliers of crude oil to China for several consecutive years. For example, it exported 107 million tons of oil to the Asian giant in 2023, 24% more than in 2022.

After Russia launched its special military operation in Ukraine, numerous Western countries imposed sanctions on Russian energy resources, including oil, refusing to buy it and preventing Moscow from trading it on world markets.

The purpose of these restrictions was to hit Russia's economy and prevent it from achieving its goals in Ukraine.

However, the result of these measures was nothing less than an aggravation of the energy crisis in the West itself, which intensified the recession in several countries, such as Germany.

At the same time, Russia managed to find alternative markets for its resources among the countries that did not support these illegal unilateral measures of the collective West.

Yandex Translate from Spanish.

https://latamnews.lat/20240720/rusia-aumenta-el-suministro-de-petroleo-a-china-en-el-primer-semestre-de-2024-1156286366.html

The debate is open:

Russian gas to go to Iran for pennies, by Sergey Savchuk for RiaNovosti. 07.21.2024.

The general public, which in one way or another follows the news of Russian energy, was recently quite excited by the statement of the Minister of Oil of the Islamic Republic of Iran. Javad Ouji reported that Tehran signed a preliminary agreement with Gazprom, within the framework of which a whole ocean of Russian gas will flow into Persia. Extremely cheap, which is typical. From the words of the Iranian official it follows that his country expects supplies in the amount of 300 million cubic meters per day, and the total cost of the contract will reach ten to twelve billion dollars per year.

Based on the figures given, by simple calculations the average cost of gas should be about one hundred dollars per thousand cubic meters. This is more than four times cheaper than Gazprom sells blue fuel to the West, and more than two times cheaper than China buys through " Power of Siberia " . The reference hundred per thousand cubic meters is actually the price bar for gas sales under contracts within the CIS countries (for example, to Belarus ) and supplies to the domestic Russian market.

The news, furiously savored by the notorious stolnik, was picked up by all kinds of media, bloggers, authors - and a wave of indignation and anger rushed across the expanses of Russia . How is it possible: again the unreasonable government, without consulting with every armchair specialist, squanders the wealth of the domestic subsoil, again giving it away practically at a loss to itself.

Calm down, citizens, only calm down.

Let's start with the fact that the mentioned agreement between Gazprom and the Iranian National Gas Company (NIGC) was signed a month ago . Therefore, it is not very clear why all sorts of champions and defenders of Russian mineral resources are so excited now. Secondly, and most importantly, it is not a binding contract that was signed, but only a memorandum, that is, an agreement of intent. So whether this project will be implemented or not is most accurately described by an old Soviet joke about the likelihood of meeting a dinosaur on the street. Fifty-fifty - you may meet one, but you may not. In this case, such a comparison is quite appropriate, since Javad Ouji's statement raises more questions than answers.

Since most Russian-language publications provide a deliberately truncated portion of the news, let us turn to the original sources. IRNA, the state news agency of the Islamic Republic, quoting its own oil minister, reports that Russia and Iran have the largest natural gas reserves in the world (24 and 17 percent, respectively) and, within the framework of the signed memorandum, intend to redirect excess gas volumes to Iran. In the long term, this will allow the Islamic Republic not only to become the largest regional gas hub, but also "to sharply increase Iran's presence on the global gas market, which, in turn, will lead to a change in global energy processes." End of quote.

Giving details, Oudzhi, in particular, mentioned that Iran's own gas production is 850 million cubic metres per day, and the additional 300 million from Russia will be used exclusively for re-export. The parties are going to sign an executive contract for a period of 30 years, which will allow Russia to compensate for the loss of the European market and make an even greater turn to the East, since the volume of supplies, according to plans, will reach 110 billion cubic metres of fuel per year.

The declared volume is not pulled out of thin air. It suspiciously precisely matches the total design capacity of both Nord Streams, three underwater pipelines of which were blown up in September 2022 as a result of a terrorist attack. An extremely thick hint towards the EU countries, which, to please their American overlords and to the detriment of their economies, refused Russian gas and shamefully hide the results of the investigation into the blowing up of the "streams". So there is also a purely political component in Javad Ouji's speech, especially since Iran is also under sanctions, significantly cutting its economic and resource potential. In particular, the possibility of expanding production within the South Pars gas basin. For Tehran, sanctions in this sector are very painful.

And now to the main thing.

The declared contract value of ten to twelve billion dollars per year and, accordingly, the price of a thousand cubic metres of one hundred dollars may be both preliminary and deliberate disinformation. In Tehran and Lakhta Center there are not amateurs, but professionals who are well aware of the geopolitical situation in the world and all the threats coming from the collective West. When (if) a binding contract is signed, trading will be conducted according to a system of currency swaps, standardly concluded for a year with the possibility of prolongation. And this automatically ties the cost of Russian export gas to quotes on international exchanges. That is, significantly higher than the notorious "hundred". The conclusion of a single long-term contract with a fixed price is unlikely, especially given the experience of recent years, when the cost of gas, against the backdrop of sudden crises, flew through the sky. For example, during the pandemic, the cost of a thousand cubic meters consistently exceeded two thousand dollars, and with the start of the SVO, it soared to an exorbitant 3900. Gazprom, of course, declared losses for the first time since 1999, but it will definitely not trade without profit. This is devoid of commercial sense, and there is no need to fantasize about this.

What is more interesting is how exactly such a large-scale project will be implemented in terms of infrastructure. Oudji mentioned that gas will be transported from Russia via the Caspian Sea , which opens up a whole list of possible options.

Firstly, back in 1973, the Soviet Union signed an agreement with the Shah of Iran for the supply of natural gas, after which the Persians extended the gas pipeline to the city of Astara in Azerbaijan . This was done in order to carry out the gasification of the Soviet Transcaucasus , since simply extending the pipe to difficult mountainous regions with a small population was financially unprofitable. Whatever they fantasize today, the USSR carried out all its accomplishments on the basis of extremely precise and pragmatic calculations.
Soviet gas was pumped until 1979, until the revolution broke out in Iran, and later the restoration of pumping became impossible due to the introduction of Soviet troops into Afghanistan . At the same time, the pipe with a capacity of ten billion cubic metres per year still exists and functions.

Secondly, the route through Turkmenistan immediately suggests itself, fortunately there is a system of gas pipelines here, for example, "Central Asia - Centre" and "East - West". But the question immediately arises as to what part of their capacities will be available, provided that they are contracted to supply gas to Uzbekistan and China. It is doubtful that Tashkent and Beijing will give up their cubic metres to Tehran.

In general, we have a project of historic scale before us, but so far there are more mysteries than understanding. One thing can be said for sure: if it is implemented, the energy and geopolitical world maps will change irresistibly. And Russia will definitely not lose from this.

https://ria.ru/20240721/gas-1960918014.html

Reuters: Indonesia includes Russian oil in September tenders, by Pëtr Buzlaev for Kommersant. 07.22.2024.

Indonesian state oil and gas company Pertamina has included Russian oil in its tender lists for purchase in September, Reuters writes , citing sources. The agency notes that Pertamina has not purchased oil from Russia for a long time, but has revised its position in 2022.

According to Reuters, the Indonesian company intends to buy Russian Urals crude for delivery on September 15-17 and Sokol for delivery on September 18-20. The last time Pertamina bought Sokol crude was more than ten years ago.

One of the tenders closed last week, the other on July 22, the agency's sources said. The sources also said Pertamina was only willing to buy Russian oil in accordance with the established price ceiling of $60 per barrel.

Indonesian President Joko Widodo spoke about the possible purchase of Russian oil back in 2022. According to him, fuel from Russia could help curb the rise in energy prices in the country.

https://www.kommersant.ru/doc/6850033

Two countries appeal to the EC over the situation with oil transit through Ukraine, 07.22.2024.

Hungary and Slovakia launch consultations ahead of hearings against Ukraine.

BUDAPEST, July 22 — RIA Novosti. Hungary and Slovakia have appealed to the European Commission over Ukraine’s halting of Russian oil (Lukoil's) transit to the EU, Hungarian Foreign Minister Peter Szijjarto said on the M1 television channel.

"Today, together with Slovakia, we initiated the launch of consultations with the EC, preceding the creation of a special commission for the investigation (with Ukraine. - Ed.), since this is an urgent matter. The EC has three days to conduct consultations with Ukraine," he said.

As the minister explained, Ukraine's halting of oil transit from Russia to EU countries violates Kiev's association agreement with the EU. In particular, it stipulates that in the event of a halt in energy supplies to Europe , the affected countries may initiate consultations, at which they are required to be represented by the European Commission.

"If there is no solution in this case, the European Union is authorized to review its obligations under the agreement and also not fulfill them, for example, in the area of ​​exemption from customs duties," the Hungarian official added.

As Szijjarto specified, Ukrainian Foreign Minister Dmytro Kuleba claimed in a telephone conversation and via video link at the EU Council of Foreign Ministers that Ukraine allows the transit of oil from Russia, but this is not true, since supplies from Lukoil stopped several weeks ago.

"We are, of course, working on various legal and technical solutions so that if this situation is not resolved soon, we can still ensure uninterrupted supplies of oil to Hungary and Slovakia," the head of the Foreign Ministry concluded.

Last week, Hungary and Slovakia reported that they had stopped receiving oil from Lukoil due to Ukraine stopping transit through its territory. The Slovak Ministry of Economy noted that Kyiv had added the Russian oil company to the sanctions list.

As the Kremlin stated, the situation with oil supplies through Ukraine to Europe does not depend on Russia.

https://ria.ru/20240722/vengriya-1961249770.html

What Benefits Could New Russian-Iranian Gas Project Bring?, 07.23.2024.

The venture will supply Russian natural gas via pipelines to Iran and may open new possibilities to re-export it to countries such as India, says an expert with Russia’s National Energy Security Fund.

A new gas project inked between Russia and Iran may have ramifications for the wider region, including India, an expert has told Sputnik.

"India is a large market for natural gas, which keeps growing to boot,” Igor Yushkov from Russia's National Energy Security Fund remarked, arguing that there is plenty of room for both Russian and Iranian gas on the Indian market.

He mentions the possibility of Iran exporting Russian gas to Europe via Turkiye, but points out that it may be a risky move considering Europe’s declared intent to cease using fossil fuels by 2050, so the prospects of Asia and India being the final recipients of the Russian gas exported through Iran seem more likely.

The successful implementation of this Russian-Iranian project, however, will require dealing with a number of issues such as, for example, the problem with building an undersea pipeline across the Caspian Sea to ship natural gas directly from Russia to Iran.

Building such a pipeline would require the consent of all the Caspian littoral states, including Azerbaijan, Kazakhstan and Turkmenistan (aside from Russia and Iran).

Stanislav Mitrakhovich, a leading expert from the National Energy Security Fund, also suggests that Iran has plenty of natural gas of its own and that the new pipeline project is likely aimed at exporting Russian gas to India.

“It is possible to build a pipeline from Iran to India,” he argued, adding that it may be beneficial for Russia to acquire India as an alternative to China in terms of purchasing Russian natural gas.

Mitrakhovich noted, however, that building such a pipeline would require either working out an agreement with Pakistan – if the pipeline from Iran to India were to be built through that country – or constructing a direct underwater pipeline from the Iranian to Indian coast.

What is Known About the Gas Deal?

Iranian Minister of Petroleum Javad Owji announced that Moscow and Tehran have reached a strategic agreement on Russian gas exports to Iran on Monday.

"With this agreement, Iran's share of trade will rise, causing changes in international balances. In other words, the agreement will act as a revolution in the energy and industry scene of the region," the minister said, as quoted by Al Mayadeen.

While this venture is yet to move beyond the memorandum of understanding stage, some details of the agreement signed between the Russian energy giant Gazprom and the Iranian National Gas Company have become available to the press.

Under the auspices of this deal, Iran may start receiving vast quantities of Russian natural gas, possibly up to 300 million cubic meters per day or nearly 110 billion cubic meters per year, which is approximately 45% of Iran’s current gas consumption and roughly equals the maximum output of the now-defunct Nord Stream 1 and 2 natural gas pipelines.

The project is also going to involve the construction of a natural gas pipeline across Iran, “from north to south,” with the annual revenue of this venture being estimated at about $10-12 billion, the Iranian news agency IRNA reported, citing Owji.
The project will purportedly involve building an underwater pipeline across the Caspian Sea, from Russia to Iran, Asharq Al-Awsat reported.

The construction, if launched, might require coordination with the border states of Turkmenistan, Azerbaijan and Kazakhstan.

https://sputnikglobe.com/20240723/what-benefits-could-new-russian-iranian-gas-project-bring-1119462147.html

China and Europe are buying more and more Russian gas, by Olga Samofalova for VZGLYAD. 07.30.2024.

Gazprom boasts a new record of gas supplies to China. At the same time, not only China, but also Europe is buying more Russian gas this year. Why is there such a rush demand for gas from Russia and what can slow down our gas exports?

Gazprom reported that on July 27 it set a record for daily gas supplies to China via the Power of Siberia gas pipeline. The supplies exceeded daily contractual obligations.

In 2024, Russia will export a record volume of gas to China – about 40 billion cubic meters – and will become its largest supplier, the executive secretary of the commission under the President of the Russian Federation on the strategy for the development of the fuel and energy complex, the head of Rosneft, Igor Sechin, recently stated.

This includes pipeline deliveries and LNG. For example, it is planned to supply about 30 billion cubic meters of gas to China via the Power of Siberia this year, as Deputy Prime Minister Alexander Novak spoke about.

It turns out that another 10 billion cubic meters will be supplied in the form of LNG. In the first half of the year, Russian LNG exports to China have already reached 5 billion cubic meters (3.6 million tons).

Why are Russian gas supplies to China growing? Firstly, supplies via the Power of Siberia are growing according to plan by approximately 8 billion cubic meters per year until 2025, when the pipeline will reach its design capacity of 38 billion cubic meters per year. In 2023, Russia supplied 22.7 billion cubic meters to China via the pipeline, in 2024 it will be 30 billion cubic meters, and in 2025 – 38 billion cubic meters. It is possible that the plan will be exceeded by the end of the year, as was already the case last year.

Secondly, it is more profitable for China to buy gas via the Power of Siberia than LNG. “The Power of Siberia contract with oil ties is now more profitable than LNG supplies, which are carried out at spot prices. In the first half of the year, spot market prices in Asia were around $400 per thousand cubic meters. Whereas with oil prices at around $80–85 per barrel, Power of Siberia prices are lower. Therefore, China is happy to take more pipeline gas. In 2022, for example, there was a different situation: China took even less from the Power of Siberia than it was supposed to under the contract. Because spot gas prices were very low that year,” says Igor Yushkov, an expert at the Financial University under the Government of the Russian Federation and the National Energy Security Fund.

As for Russian LNG, given the current price ratio in Europe and Asia, which are practically the same, and with favorable ice loads, it is quite likely that LNG from Yamal LNG will now go to Asian markets via the eastern part of the Northern Sea Route, the expert believes. As long as the ice conditions allow, Novatek will fulfill its contract for LNG supplies to China for 1.9 million tons of LNG. LNG supplies to China are also coming from Sakhalin-2 (1.5 million tons) and Portovaya LNG (0.2 million tons).

The potential for gas supplies to China in the future is more than 100 billion cubic meters, says Sechin. “By the end of the decade, the total volume of supplies to China under existing contracts should grow to 48 billion cubic meters at good prices (although lower than in Europe), including supplies of 10 billion cubic meters via the Far Eastern route, which will start in 2027. The agreement under discussion to supply 50 billion cubic meters per year via Power of Siberia 2 could compensate for Gazprom’s lost export volumes to Europe by about 40%,” notes Artur Bedzhanov, senior personal broker at BCS World of Investments.

Russian gas supplies to Europe are also growing. Thus, in May 2024, the European Union imported approximately 30% more natural gas than in September 2022 (data from the consulting company ICIS). Gas from Russia comes to Europe through three channels - via the Turkish Stream pipeline, via the Ukrainian pipeline and by sea in the form of LNG.

“Supplies to Europe are also growing due to pipeline gas, since it has become more profitable to buy from Gazprom than from the spot market.

Last year, for example, Gazprom gas prices were not lower than the spot market at every moment. Because spot prices were falling all year – from $600 at the beginning of the year to $300–350 by the end of the year. Contracts with Gazprom are also tied to the spot, but with a lag of several months, so the price fell more slowly than for LNG,” Yushkov explains.

According to his forecast, if in 2023 Russia supplied approximately 27 billion cubic metres of gas, then in 2024 supplies could increase by 3–6 cubic meters – to 30–33 billion cubic metres.

As for Russian LNG, it goes mainly to Europe when the eastern part of the Northern Sea Route is closed due to ice conditions (until June-July) and when LNG prices in Europe and Asia are either the same or even higher in Europe than in Asia. Because the transport leg to Europe is shorter than to Asia through the Suez Canal or bypassing Africa (when the passage along the Northern Sea Route is closed).

At the same time, there are still risks of a ban on Russian gas supplies to Europe. Sanctions have not yet been introduced, but Europe has already discussed a possible ban on LNG supplies. However, the Europeans have not yet unanimously agreed to them for obvious reasons - they do not want rising prices, deficits and an energy crisis.

Yushkov believes that the ban on Russian LNG may occur as a result of American sanctions, not European ones. The US has already imposed sanctions against the new Arctic LNG 2 project and stopped supplies from the project. Washington may similarly impose sanctions against existing projects – Yamal LNG, Cryogas-Vysotsk LNG and Port LNG.

"The US does not need Russian LNG. However, they will introduce sanctions against it closer to 2026. Now I would not expect a blockade of Russian gas supplies. Unless, of course, there is no progress in the peaceful settlement of the situation in Ukraine and there are no reasons left to introduce sanctions. Because in 2026-2030 there will be a new wave of commissioning new gas liquefaction capacities in the US, Qatar and Australia, and then it will be possible to eliminate competitors from the market more painlessly for Europe," says the FNEB expert.

However, Russia may already be preparing to cover its bases. At least, unofficial information has appeared in Western media that unknown persons are allegedly buying up LNG tankers on the world market and creating a shadow LNG fleet in the interests of Russia.

"The creation of a shadow LNG fleet loyal to Russia may be a reality in preparation for the possible introduction of sanctions against Yamal LNG. If the US starts to push this project out of the market, then tankers will be needed to transport this LNG to Asian markets.

To export LNG through the Suez Canal, 40 tankers are needed for the first two stages, and 55 tankers for all three stages. And if we go around Africa, then we will need 75-80 tankers,” estimates Igor Yushkov.

If Yamal LNG ends up under sanctions, then Arc7 ice-class tankers will import products from Yamal LNG and Arctic LNG 2, which is already under sanctions, to transshipment hubs in the Murmansk region and Kamchatka. And from there, the LNG will be picked up by the very same shadow fleet that is currently being published and exported to Asian markets,” the expert concludes.

But what will happen to gas transit through Ukraine after the transit agreement expires in December 2024 – no one has an answer yet, and much will depend on who is elected as the new US president. “Although if no one does anything, does not make any decisions, then transit may be preserved. Many people think that a new transit contract should be signed to preserve transit, but in reality it is not needed. Because Ukraine has implemented European legislation, according to which it is obliged to hold auctions to reserve transit capacities without any transit agreements. Gazprom can take as much capacity at auctions as there are orders in Europe,” the source explains.

https://vz.ru/economy/2024/7/30/1279779.html

Japan does not have a large share of nuclear energy?
They had a lot of reactors. They've closed most of them now?

Russia's oil and gas revenues increased by 61.6% in seven months, by Laura Keffer for Kommersant. 08.05.2024.

In January-July, the volume of oil and gas revenues in Russia increased to 6.777 trillion rubles, according to statistics on the Finance Ministry website. This is 61.6% more than in the same period last year (4.193 trillion rubles), TASS notes.

According to the results of seven months, taxes on the extraction and export of oil and gas condensate brought the budget 7.944 trillion rubles. The largest increase was in the collection of the additional income tax from the extraction of hydrocarbon raw materials - 2.2 times, to 1.539 trillion rubles. The mineral extraction tax and export duty on gas increased by 6.7%, to 1.022 trillion rubles.

According to the results of six months, oil and gas revenues amounted to 5.698 trillion rubles, showing growth of 68.5% year-on-year. The Ministry of Finance justified this by the growth in prices for Russian oil. The projected volume of Russian oil production for the whole of 2024, agreed with OPEC, should amount to 505-515 million tons. This is 3-5% less than in 2023.

https://www.kommersant.ru/doc/6877576