Moscow’s decades-long gas relations with Europe are in shambles – #Moscows #decadeslong #gas #relations #Europe #shambles
NOVY URENGOY, RussiaFeb 14 (Reuters) – Moscow’s has been carefully crafted for decades as a key source of income for the Kremlin Europe with gas hardly trade military heal from the ravages of conflict.
President Vladimir Putin’s “special” in Ukraine military A combination of Western sanctions and Russia’s decision to cut off supplies to Europe has sharply reduced the country’s energy exports since the start of “operation” almost a year ago.
Recent sanctions, including price caps, could further disrupt oil trade, but finding new markets for crude and refined products is easier than for gas.
of Russia Europe with gas its trade relies on thousands of miles of pipelines stretching from Siberia to Germany and beyond. Until last year, they locked Western buyers into long-term supply relationships.
Yuri Shafranik, who was Russia’s fuel and energy minister in 1993-1996, told Reuters: “Of course, Europe loss of market Russia for gas is a very serious test in its aspect”.
The former general manager at Gazprom ( GAZP.MM ) was more direct.
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“The jobs of hundreds of people who built the export system over decades have now gone down the toilet,” a former manager told Reuters on condition of anonymity for fear of reprisals.
And current employees say it’s business as usual.
“Nothing has changed for us. Last year, we doubled our salary,” a Gazprom official told Reuters in Novy Urengoi, who was not authorized to speak to the press. The Arctic city is often called the “gas capital” of Russia, as it was built to serve the largest gas fields.
‘A STATE WITHIN A STATE’
Gazprom, the state-owned gas export giant with offices there, was established in the dying days of the Soviet Union in 1989 under the Ministry of Gas Industry headed by Viktor Chernomyrdin.
“Chernomyrdin never allowed anyone to poke their nose into Gazprom. It was a state within a state and to some extent remains so,” Shafranik said.
On February 24 last year military less information has been obtained since operations began.
Like many Russian companies, Gazprom has stopped disclosing details of its financial results.
According to Reuters estimates based on data on export duties and export volumes, Gazprom’s revenue from foreign sales was 6.3% higher than in the same period last year. billion about 3.4 in January from the dollar billion dollars decreased.
Figures, export forecasts and average gas prices together with, Gazprom’s export revenues will almost halve this year, and Russia’s January 25 billion indicates that it will increase the dollar budget deficit.
The company’s natural gas exports almost halved last year, reaching the lowest level in the post-Soviet space, and the downward trend has continued this year.
European Commission President Ursula von der Leyen has estimated that Russia has cut off 80% of gas supplies to the EU in the eight months since the conflict in Ukraine began.
As a result, Russia supplied only 7.5% of Western Europe’s gas needs by the end of last year, compared to about 40% in 2021.
Before the conflict, Russia was confident that it would sell neither too much nor too little to Europe.
Yelena Burmistrova, the head of Gazprom’s export division, said at the 2019 industrial event in Vienna that the company 2018obtained in 20He said that the record delivery of more than 0 billion cubic meters (bcm) outside the Soviet Union is a “new reality”.
Total last year 10It was slightly more than 0 billion cubic meters.
Last year, Russia’s transportation capabilities were weakened after the mysterious explosions on the Nord Stream pipelines from Russia to Germany in the Baltic Sea. Russia and the West blamed each other for the explosions.
Pulitzer Prize Winner USA reporter Seymour On Hersh’s blog USAwas responsible and that the United States was “absolutely untrue.”
Washington has long criticized Germany’s policy of relying on Russian energy, which until last year Berlin saw as a tool to improve relations.
20AGREEMENT OF THE THIRD CENTURY
In turn, Putin long ago last year, it was trying to diversify Russian gas markets, but this policy gained momentum.
In October, he floated the idea of creating a gas hub in Turkey to channel Russian gas flows from the Baltic Sea and Northwest Europe.
Russia is also seeking to increase pipeline gas sales to China, the world’s largest energy consumer and the largest buyer of crude oil, liquefied natural gas (LNG) and coal.
Supplies began in late 2019 through the Power of Siberia Pipeline, and Russia aims to increase annual exports to 38 billion cubic meters from 2025.
Moscow also receives more than a year from the yet-to-be-built pipeline from Sakhalin Island in the Pacific Ocean 10 signed an agreement with Beijing to buy billion cubic meters of gas, and Russia is preparing “Power of Siberia 2” plans from Western Siberia. An additional 50 billion per year to China.
It remains to be seen whether this relationship will be as profitable as decades of gas supplies to Europe.
The most important assets of “Gazprom” are in Western Siberia and in 2025, which celebrates its 50th anniversary 10The city of Novy Urengoy, population 0,000, is located in the wider Arctic Yamal region, housing seasonal workers in utilitarian, high-rise blocks.
About 3,500 kilometers (2,175 miles) northeast of Moscow, one of the fields in the tundra region is Urengoi.
After the discovery of one of the largest deposits in the world in 1966, the Soviet Political His office began negotiations with West Germany on the transfer of gas to pipes, because at that time there was no extraction technology in Russia.
The resulting deal, dubbed the “deal of the century,” was finalized in 1970 after the then-Soviet foreign minister, Andrei Gromyko, nicknamed “Mr. Nyet” in the West for his uncompromising approach, said yes to the gas pipeline deal. This included the supply of heavy equipment for Moscow as well as gas for Europe.
20 Current annual gas supply contract prices with about 30 billion dollars is worth
This meant that for decades Europe, and especially Germany, benefited from relatively cheap, long-term contracts and relied on Russian natural gas or methane as feedstock for heating households and the petrochemical industry.
COMPLEX NEGOTIATIONS AHEAD
Negotiations for new gas sales with China are expected to be complicated, not least because China won’t need more gas after 2030, according to industry analysts.
Russia is also competing more than in the past with renewable energy sources as the world seeks to limit the effects of climate change as well as rival pipeline gas supplies to China, including Turkmenistan.
An LNG pipeline that can be shipped anywhere in the world has further reduced the need for gas.
Gazprom and China kept the agreed gas price secret. in Moscow Ron Smith, an analyst at the BCS brokerage company located in dollars expected to be, which is much lower than the prices in Europe.
It is also $700 below Gazprom’s export price per 1,000 cubic meters expected this year by the Russian Economy Ministry.
Last year, Russia’s energy finances, which are not clearly divided into oil and gas, were supported by the market effect of fears of shortages.
European gas prices hit record highs and international oil prices neared all-time highs shortly after the special military operation began.
Gas and oil prices have fallen since then, and Western price caps imposed in December and earlier this year are set to further reduce Russian revenues.
Meanwhile, the Kremlin has set Gazprom the big task of building 24,000 kilometers of new pipelines to supply gas to 538,000 homes and apartments in Russia from 2021 to 2025.
Domestic gas prices are regulated by the government, and there have been discussions about liberalization of the gas market, a sensitive issue for Russian households.
Back in Novy Urengoy, where temperatures drop to almost minus 50 Celsius (minus 58 Fahrenheit), Achimgaz, a joint venture between Gazprom and Germany’s Wintershall Dea ( WINT.UL ), also has offices and the flag of Austrian energy company OMV. (OMVV.VI) covers outside the administrative building.
When asked about his presence there, the spokesperson of OMV said that the building houses only the offices of the operator of the Yujno-Russkoye field, in which the company has a share.
In March, OMV abandoned plans to buy a stake in the Gazprom gas field project, while Wintershall Dea, in which BASF ( BASFn.DE ) owns just under 73%, said it was pulling out of Russia last month.
“Gazprom” official, who did not want to be named, said that the company will regret it.
“We will simply have to use more gas for our own households instead of exporting it to Europe.” China also needs gas,” the official said.
Report by Vladimir Soldatkin; Supplement by Alexandra Schwarz-Goerlich in Vienna report; Edited by Barbara Lewis
Our standards: Thomson Reuters Trust Principles.
2023-02-14 09:12:41
Source – reuters
Translation“24 HOURS”