By Sujoyini Mandal and Marika Semerdzhian
Gazprom’s traditional economic and strategic business models are coming under tremendous pressure. Shifting LNG trade patterns are impacting spot markets in Europe and Asia, partly as a result of the shale gas boom in the US; lack of investment in new fields is depleting Russia’s gas reserves; and Russia’s domestic gas market is facing market pressures from liberalisation.
There is no doubt that Russia remains a central player in the global energy sector. Vertically integrated, Gazprom controls about half of the country’s proved reserves of natural gas and its export monopoly is enshrined in law. This could change very soon. Gazprom experienced a difficult 2012, with net profits falling by a third in the first half of the year. This comes in the wake of a weaker demand from Europe caused by the economic crisis and perhaps unwillingness to put up with the gas giant. In spite of these challenges, we believe Gazprom is actually positioned to take advantage of, rather than suffer from, rapid changes in the energy industry, both at home and abroad. Here is why. Continue reading »
On the geopolitical front, Ukrainian President Viktor Yanukovich’s relationships with Russia to the east and Europe to the west are currently going through a testy period. Which is putting it mildly. The struggle for Ukraine’s future between Brussels and Moscow is one of the most tense and high-stakes geopolitical stand-offs between the two sides in recent years.
Russian pressure, domestic politics and Yanukovich’s attempts to play east and west against each other – offering to sign with whichever side provides the bigger bailout for his ailing economy – may all have factored in on his government’s stunning decision last week to back out of historic EU integration agreements. Continue reading »
The Russian parliament dealt Gazprom a blow on Friday, passing legislation that will allow independent gas producers to export liquefied natural gas.
But read the small print of the law and it’s not as bad for Russia’s natural gas monopoly as it sounds. Only two independents will be permitted to muscle into the LNG export business and the scope of their operations will be limited to specific gas fields. Continue reading »
Firtash: solving problems
Ukraine’s parliament stuck the Yulia Tymoshenko to-do item into the “later” basket on Tuesday, putting off until Thursday a vote on legislation that could set in motion the release of the jailed opposition leader. Her freedom is a key condition set by the EU to sign historic free trade and association agreements next week in Vilnius. Tick, tock.
Yet while Ukraine’s handling of this case of “selective justice” drags on, there was also news out of Ukraine on Tuesday reinforcing the view that Russia – which is pressuring Ukraine to back away from the EU agreements – is meddling in the Ukraine gas market somewhat “selectively”, too. Continue reading »
Ukraine has stepped back from the brink of another gas war with Russia and resumed gas imports from its powerful neighbour after a one week lull.
It’s a relief for the EU that relies on Ukraine as a transit hub for most of its Russian imports. But reconciliation of the latest gas spat could be part of a poker game that Moscow and Kiev are playing in the run up to the EU summit in Vilnius. Continue reading »
Russia and Vietnam signed a raft of economic agreements on Tuesday that will strengthen their strategic partnership and counter rising Chinese influence in southeast Asia.
The deals, signed during a visit by Vladimir Putin to Vietnam, will see Russia step up involvement in Vietnamese energy markets and help boost security in the country that has been a close Kremlin ally since Soviet times. “Vietnam has been a long-term, trustworthy partner for Russia and the political dialogue between the two countries is at a high level,” Putin told reporters after talks with Truong Tan Sang, his Vietnamese counterpart. Continue reading »
As Russia moves to liberalise liquefied natural gas exports, foreign companies are getting serious about buying gas from the Novatek-led Yamal LNG venture. In the space of just over one week both Chinese National Petroleum Corporation and Spanish Fenosa have signed up to take LNG from the groundbreaking venture that will end Gazprom’s monopoly on Russia’s foreign gas trade. Continue reading »
The Kremlin, and Russian gas giant Gazprom, must be watching events in Ukraine with a bit of concern.
Not only is Kiev calmly defying Russia’s bullying, steadily moving closer to breaking free of its eastwards geopolitical pull by looking to sign historic free trade and association agreements with the EU in late November, but it is also pushing two new energy deals which could cut sharply the reliance on imports of Gazprom’s gas. Continue reading »
Foreign media coverage of Ukraine has been dominated over the past year by the European Union’s repeated warnings: the signing of historic bilateral association and free trade agreements is conditional on the release of jailed opposition leader Yulia Tymoshenko.
But lost in the Tymoshenko buzz is a desperate plea from Kiev to Brussels: help us import more gas from EU markets at lower prices than those charged by Gazprom, the Russian gas giant. Continue reading »
Sechin: he seems friendly
The cash-strapped government of Belarus is preparing to re-start its privatisation programme, stalled since last year. It plans to sell stakes in a few dozen state-owned companies and Mozyr refinery, one of two in the country, is the jewel in the crown.
It seems that Russia’s Rosneft, which already partly controls Mozyr with Gazpromneft, the oil arm of Russian state gas giant Gazprom, is among the biggest potential bidders.
Continue reading »
Russia’s president Vladimir Putin raised eyebrows on Tuesday by announcing that Gazprom had granted Ukraine a temporary yet substantial price discount on natural gas imports.
On the one hand, his comments fuelled speculation that Moscow – which has threatened to hamper cross-border trade if Kiev forges closer ties with the EU – was trying to woo Ukraine with a big carrot, putting the stick to one side for a while. Continue reading »
Russian gas exports to Europe jumped by 25 per cent in September, continuing a year-on-year rally that has been supporting sentiment towards Gazprom’s stock. While investors in Gazprom can expect fatter dividends this year on the back of rising export earnings, there’s a risk that the surge in European demand for Russian gas will be short-lived. Continue reading »
Xi Jinping, China’s president, wound up a two-day official visit to Turkmenistan on Wednesday night by bagging a package of natural gas deals that will strengthen China’s grip on central Asia’s energy resources. He has since arrived in St Petersburg where, as well as attending the G20 summit, he’s expected to be talking gas co-operation again – this time with Russia’s Gazprom.
Gazprom is eager to clinch a long-delayed gas contract with China that would open up a vast new export market on Russia’s eastern flank. But after his success in Turkmenistan, Xi may decide to play hard to get. Continue reading »
Rosneft has bolstered its position in the Russian gas market by taking full control of Itera, an independent gas producer and trader. Announcing the deal on Tuesday, Rosneft reiterated its goal of becoming Russia’s biggest independent gas company, with production second only to that of Gazprom.
Rosneft has invested $2.9bn to acquire the 49 per cent of Itera that it does not already own. “The gas business is one of the top priorities,” Igor Sechin, Rosneft’s chief executive (pictured), said in a statement on Tuesday. Continue reading »
By Jacek Saryusz-Wolski MEP
Ukraine must get off the fence when it comes to its relations with Russia and the European Union.
Hopes that an EU-Ukraine association agreement, including a deep and comprehensive trade agreement, might be signed at the November Eastern Partnership summit in Vilnius are fading. Continue reading »