what will happen in this case, how will Europe replace Russian gas, the consequences of refusing gas exports for Russia
In August, Gazprom reportedthat exports to non-CIS countries for 7.5 months fell by 36%, and production was registered by 13.2%.
because of The decision of the Federal Customs Service not to publish data on exports has a cost with estimates of flows, but judging by European data, in July, exports from Russia amounted to about 3.7 billion cubic meters of gas. This is about three times less than in June last year, when Russia exported 12.4 billion cubic meters.
Now the rupture of gas ties between Europe and Russia is coming from two sides. Europe intends to completely abandon Russian gas by 2027, and Russia is taking measures to pay for gas in rubles, is in no hurry to take a turbine from Germany for the Northern stream-1″ and pumps through the pipeline ever smaller volumes.
Sooner or later, this two-way traffic may introduce us to a new world where Europe lives without Russian gas and Gazprom without exports to Europe. Let me tell you what this world might look like.
How much gas does Gazprom produce
Every year Russia reaches 720 billion cubic meters of gas supply. It exports just over 200 billion, last year – 204 billion. Of these, 130 billion cubic meters – to Europe.
Last year, Russia supplied 10.5 billion cubic meters of gas to China, and in this study, from 16 to 20 billion. Turkey accounts for 27-28 billion cubic meters, 30 billion – in the CIS countries, another 20 billion – in Belarus.
Most of the profit – about 500 billion cubic meters – goes to the domestic market.
What does the implementation of gas supplies for export look like now?
On Nord Stream 1, the main pipeline at the European anchor, only one out of six turbines is currently operating. The rest, according to the company, have completed their overhaul life. One turbine sent for repair first stuck in Canada due to arrived, was sent to Germany, but Gazprom is in no hurry to take it away, referring to the ambiguities of the sanctions legislation. At the end of August, Nord Stream will be shut down for three days.
Russia also supplies liquefied natural gas (LNG) to Europe. Novatek is engaged in its export, in particular, the company exports gas to France, Spain and the Netherlands. But the Novatek Yamal LNG plant is operating at full capacity, more liquefied gas, it supplies not in a state. There is also LNG export from the plant “Sakhalin-2”. The main volumes go to Japan and South Korea.
The Yamal-Europe gas pipeline is currently practically not used, delivery has been stopped. The Power of Siberia pipeline is in operation, through which gas is exported to China. Some amount of supply the weight goes along the Turkish Stream. The Blue Stream gas pipeline, which is oriented to the domestic market of Turkey, is still active.
How Russia will replace Europe
It is obvious that a huge complexity can be associated with pipeline gas, and it is impossible to quickly reorient it. If you stop supplying it to Europe, it will be difficult to transfer these volumes.
The construction of a new gas pipeline “Sila Siberia-2″ in China. Back in January, Gazprom completed a feasibility study, but construction is actually not underway, because there is no contract with China.
As in the case of the “Power Siberia-1″, for the construction of a long-term contract, in which the volumes and the price formula must be prescribed. There is currently no such contract. Will it he Deal is unknown.
But even under an optimistic scenario 3-4 years. According to media reports, the construction of the Sila Siberia-3″, or the Far East route. detection of this response from the Sakhalin-Khabarovsk-Vladivostok gas pipeline network, so it is not difficult to build it.
Under the terms of the contract for the supply of 10 billion cubic meters of gas per year to China between Gazprom and CNPC, but there are questions about the resource base. It should be an article Yuzhno-Kirinskoe occurrence, but the start of admission there has already been postponed several times, even before the introduction of new doses. not entirely clear did with him new problems.
If exports to Europe reset, Turkey, China, Central Asia and other established natural economies will set. But now even all together they consume three times less than in Europe.
So a new life is beginning for Gazprom: it is greatly reduced in the company, focusing on the domestic market, without exporting profits.
What is the Russian budget
The loss of European exports could consume the Russian budget by about 700-800 billion rubles of lost income. Here’s what they are made up of:
- Income from export duties. For pipeline gas it is 30%. There are no such percentages for LNG, so from the point of view of tax revenues from exports through pipes is much more profitable. In 2021, the federal budget set a share of about a trillion rubles from the export share. Now gas prices are higher, but even if it rains and they return to the level of 2021, the losses will amount to about 700 billion rubles.
- Mineral extraction tax. The MET rate for gas production is 18%. If Gazprom cuts its production due to less exports, then the income from the severance tax decreases. Last year they amounted to 577 billion rubles, that is, the budget is losing about 103 billion. True, this year Gazprom must add 1.2 trillion rubles of severance tax.
What will be the consequences for Gazprom
Most likely, Gazprom is turning into a company that operates on the domestic market. Is there we have, for example, Rosseti, a large infrastructure company that transports electricity within Russia.
The problem is that gas prices on the market and in Europe are highly valued. When exported, they are almost 20 times higher. Typical contract. Gazprom had a monopoly on pipeline exports: no other company could supply gas. Due to this, Gazprom receives some benefit. On the other hand, it offers low gasification-enabled commodity prices and well-paid costs.
In the new reality, Gazprom will have significantly less export earnings and, accordingly, the ability to fulfill obligations will be reduced.
At the same time, from July 1, the government raised gas prices by 4% at the level of 16%, that is, it also uses tariff regulation as an anti-inflationary policy.
At the same time, there are, for example, producers of nitrogen fertilizers in Russia. The main component of their cost is the presence of gas. Such companies can buy light gases from Gazprom and sell their products for export at world prices. This situation is also not to the company’s liking.
From Gazprom’s point of view, it would be logical to raise the issue of domestic prices, which are now regulated by the government. Therefore, the cost of gas for Russian users is likely to cause pressure and discussion.
What can replace Russian gas
Europe consumes about 400 billion cubic meters of gas per year. Somewhere 40% Russia supplies about 130 billion of them through a pipeline and 20 billion in the form of LNG.
60% of Europe’s gas comes from other sources. About 50 billion cubic meters of them are produced in Poland, Switzerland, and the Netherlands. Another major supplier of pipeline gas is Norway. In total, it reaches about 120 billion cubic meters, and most of the profit comes from Europe.
LNG imports are another 100 billion. There are supplies from Algeria, Libya, Azerbaijan, but in terms of use, these are relatively small volumes.
Europe can replace Russian LNG relatively painlessly, but 130-140 billion there is nothing special to place pipeline gas from Russia. Norway is not yet able to produce and supply so much.
Europe will suffer and gas will remain very expensive for them for the foreseeable future. It is hoped that some people on Groningen, a gas field in the Netherlands, which at the beginning 2010s was of importance and gave 70-80 billion cubic meters of gas per year. Then earthquakes occur in that area. Local residents protested against gas production, the birth of the place was decommissioned.
Now only about 6 billion cubic meters are produced in the Netherlands, but the country’s authorities may reconsider their decision on Groningen.
Another option is not to decommission the German nuclear power plants. The government decided to consume their work under pressure from environmental activists, but this is completely irrational against the backdrop of supply problems.
France once upon a time acted differently and nuclear energy developed just after its energy thinking 1970s to become independent of the choice of imported oil. Germany already has nuclear power plants that can be operated. You just need to rethink your decision.
Currently, Europe is processing its underground gas storages – UGS – to the level of recommendations by the European Commission of 80%. Their total capacity is 100 billion cubic meters. they happened to compensate for the seasonality of gas demand because production is more or less constant and demand is higher in winter. While the average development stays at 76%.
How Europe gets through this winter depends a lot on temperature. Gas consumption can be reduced by 10% if, for example, a warm one is used in winter. If there is not enough gas, several industrial facilities can be turned off. Last but not least, stop the production of electricity and reduce supplies for heating needs.
What in the end
- For export to Europe twenty% gas produced by Gazprom. If the shipments are stopped, the disappearance will look suspicious, but not critical.
- Gas prices in Europe are much higher than in the raw materials market – Gazprom may lose a significant share of its revenue. Perhaps this is pressure on prices in the Russian market.
- because of stopping exports to Europe The Russian budget may decrease from 700 to 800 billion rubles.
- Right now we will replace Russian gas with Europe with nothing. All hope is for underground storage facilities, reactivated deposits and nuclear energy.
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