The European Geopolitical Forum

Transcription

The European Geopolitical Forum
The
European
Geopolitical
Forum
www.gpf-europe.com
EGF Gazprom Monitor
Issue 45: Feb. 2015
A Snapshot of Key Developments in the External Relations of the Russian Gas Sector
By Dr Jack Sharples, EGF Associate Researcher on the external dimensions of Russian gas and Lecturer in Energy
Politics at the European University of St Petersburg
Key points:

Gazprom and the EU: European Commission could present the results of its antimonopoly investigation into
Gazprom ‘in a matter of weeks’

Turkish Stream: Gazprom CEO and Turkish Minister of Energy and Natural Resources visit intended ‘Turkish
Stream’ pipeline route; Turkish Botaş receives 10 percent discount on gas imports from Gazprom; Turkish
Stream: Pro et Contra

Ukraine: The ‘winter package’; A new dispute over gas supplies to the Donbass; Gazprom awaits advance
payments for March gas supplies as time runs out on the ‘winter package’

Belarus: Gazprom Transgaz Belarus named ‘top taxpayer’ in Belarus; Belarus settles payments for Russian
gas in roubles; Gazprom to invest in Belarusian gas transmission and gas storage

China: Gazprom seeks Asian investment and loans, receives top credit rating from Chinese agency; Gazprom
promises exports to China still on schedule
EGF Gazprom Monitor
www.gpf-europe.com
Gazprom and the EU
Czech Republic (RWE Transgas, Vemex), Slovakia
European Commission could present the results of its
antimonopoly investigation into Gazprom ‘in a matter
Gaze), Lithuania (Lietvos Dujos), Estonia (Eesti Gaas),
and Bulgaria (Bulgargas, Bulgartransgas, Overgas).
of weeks’
Key figures from the European Commission have
suggested that EU investigators are moving closer to
presenting
(SPP), Hungary (E.ON Magyarorszag), Latvia (Latvijas
the
results
of
their
antimonopoly
investigation into Gazprom, which could have a
significant impact on Gazprom’s commercial strategy
A year later, in the beginning of September 2012,
European Commission antitrust investigators formally
launched their investigation of Gazprom, with the
company suspected of breaching Articles 101
(restriction of competition) and 102 (abuse of
dominant position) of the Treaty on the Functioning of
in the EU gas market.
the EU (TFEU). According to European Commission
In an interview with the Wall Street Journal on the
17th of February, the EU Competition Commissioner,
sources, Gazprom is suspected of three specific sets of
anti-competitive practices:
Margrethe Vestager, stated:

I think we can move the case forward in a
hopefully relatively short time span… It’s
very important for me to make sure that
any company in the European market is
being faced with the same set of rules
and the same effort of enforcement.
First, Gazprom may have divided gas markets by
hindering the free flow of gas across Member
States.

Second, Gazprom may have prevented the
diversification of gas supplies by importing states.
A week later, the European Commission Vice-

Third, Gazprom may have imposed unfair prices
President for Energy Union, Maroš Šefčovič, hosted a
on its customers by linking the price of gas to oil
press conference for the launch of the EU ‘Energy
prices.
Union’ project. When asked about the European
Between October 2013 and early 2014, a series of
Commission
into
meetings and negotiations took place between the
Gazprom, Šefčovič replied that the responsibility for
Gazprom CEO, Alexei Miller, the Russian Energy
the case lay with Vestager, adding: “It is her decision
Minister, Alexander Novak, the (then) EU Competition
when she will present the results of the investigation.
Commissioner, Joaquin Almunia, and the (then) EU
I understand it is a matter of weeks”.
Energy Commissioner, Günther Oettinger. In February
The investigation began in September 2011, when
2014, Almunia announced that progress had been
European Commission antitrust investigators raided
made on Gazprom’s use of destination clauses that
the offices of energy companies in ten EU Member
prevent the re-export of imported Russian gas, thus
States, amid concerns over their contractual relations
hindering the free flow of gas across Europe. Progress
with Gazprom. The states under investigation include
was also reportedly made on clauses in Gazprom’s
Germany (E.ON, RWE, Gazprom Germania), Austria
contracts that squeeze out competitors
(OMV, Econgas), Poland (PGNiG, TSO Gaz-System), the
preventing diversification of imports), which suggests
antimonopoly
investigation
(thus
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negotiation over Gazprom’s ownership of pipeline
roubles, with rouble-dollar exchange rate of 30-33
infrastructure, questions of Third Party Access to that
roubles to $1, giving a turnover of $139-153bn. If the
infrastructure, and the ‘take or pay’ clauses in
fine were based on 2013 financial data, Gazprom
Gazprom’s contracts.
could be faced with a fine of $13.9-15.3bn. Gazprom
However, the issue of gas pricing remained a major
concern. In a statement, Almunia explained; “We have
received good comments on two of the three
concerns that can give way to formal commitments,
but on prices we have not yet received what we
need”. Negotiations came to a halt following Russia’s
has not yet released its financial data for the full
calendar year of 2014, and the dramatic shift in the
value of the Russian rouble will undoubtedly have an
impact on Gazprom’s turnover, so the measurement
of Gazprom’s 2014 turnover in dollars or euros is thus
far unclear.
annexation of Crimea and the eruption of armed
conflict in Eastern Ukraine.
It is important to note that oil-indexed gas prices are
not, in and of themselves, illegal. Indeed, oilindexation was the industry standard until the shift to
spot prices in recent years. Rather, the issue is
whether Gazprom used oil-indexed pricing as a means
of price discrimination between companies in
different EU member states, for example, by charging
higher prices to energy companies in some EU
member states and lower prices to companies in
other EU member states.
When the European Commission publishes the results
of its investigation, it will do so in the form of a
‘statement of objections’. This is the document in
which the European Commission informs the parties
concerned (in this case, Gazprom) of the objections
raised against them. The party will then have a chance
to respond before the Commission makes a decision
on whether the party is in breach of European
antitrust rules.
Turkish Stream
Gazprom CEO and Turkish Minister of Energy and
Natural Resources visit intended ‘Turkish Stream’
pipeline route
On the 7th of February, the Gazprom CEO, Alexei
Miller, and the Turkish Minister of Energy and Natural
Resources, Taner Yildiz, took a helicopter flight to
examine the proposed route of the ‘Turkish Stream’
pipeline.
As reported in last month’s Gazprom Monitor, and
illustrated in the map included on the final page of
this month’s edition, the proposed route will follow
much of South Stream’s intended route across the
floor of the Black Sea. At the point where South
Stream was planned to enter Bulgaria’s exclusive
economic zone, the Turkish Stream pipeline is planned
to continue on and make landfall at Kiyikoy, on the
Turkish coast. From there, Gazprom plans that the
onshore section of the pipeline will continue west via
Luleburgaz to Ipsala. Ipsala is intended as the delivery
The standard financial penalty for anticompetitive
practices is 10 percent of the company’s annual
point, from which gas supplies will be delivered on
across the Turkish-Greek border.
turnover. In 2013, Gazprom’s turnover was 4.6 trillion
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www.gpf-europe.com
Following Mr Miller’s visit to Turkey, Gazprom
Thirdly, the Turkish Stream pipeline does not involve
announced that “In the near future a permit is to be
Gazprom constructing pipelines on EU territory, thus
obtained for conducting FEED [Front-End Engineering
avoiding the regulatory issues which plagued South
and Design] operations for the new Turkish offshore
Stream – namely, Gazprom’s reluctance to provide
section”, signalling the advancement of the project
third party access to South Stream’s onshore sections
towards the construction phase.
in the EU, in line with current EU gas market
legislation.
Turkish Stream: Pro et Contra
However, the Turkish Stream project faces several
serious obstacles. The first is that Gazprom’s existing
The ‘Turkish Stream’ project (and its proposed
imminent implementation) is attractive to Gazprom
for several reasons. Firstly, it will allow Gazprom to
recoup some of its expenditure on South Stream.
Gazprom has already invested significant sums in
developing the onshore (Russian) sections of South
Stream – referred to as Russia’s own ‘Southern
Corridor’. Gazprom had already purchased enough
contracts specify delivery points which may only be
reached using Ukrainian gas transit – European energy
companies may not be willing to change where they
receive deliveries. As the European Commission VicePresident for Energy Union, Maroš Šefčovič, noted:
“there are very clear [contractual] articles about the
place of delivery and this is not the Greek-Turkish
border”.
steel pipes for at least one of the offshore lines of
South Stream, and is currently paying for the storage
of those pipes in the Bulgarian port of Varna. Finally,
Gazprom has a contract with the Italian company,
Saipem, for the laying of pipeline on the bed of the
The second problem is the lack of cross-border
connections for bringing gas from the Greek-Turkish
border to the intended customers in South-East and
Central Europe.
Black Sea. If that contract is not utilised for the
If the primary purpose of Turkish Stream is to replace
construction of Turkish Stream, EU sanctions could
gas transit via Ukraine, then it is worth noting that in
make it very difficult to secure a new pipe-laying
2013 the transit of Russian gas via Ukraine was 82.3
contract at a later date.
bcm, including 12.8 bcm delivered to Turkey and 69.5
Secondly, the Turkish Stream pipeline is intended to
bcm delivered to other European countries.
reduce dependence on gas transit via Ukraine for gas
Bulgaria and Romania could be served by reversing
deliveries to Turkey. Gazprom exports approximately
the ‘Trans-Balkan’ pipeline, which delivered 19.5 bcm
26-27 bcm per year to Turkey, of which approximately
of Russian gas to Romania, Bulgaria, and Turkey via
12-15 bcm per year is delivered via Ukraine and the
Ukraine in 2013. If gas deliveries to Poland (3.8 bcm in
remainder is delivered directly to Turkey using the
2013) are also discounted, this leaves 59.0 bcm of
Blue Stream pipeline. One line of the ‘Turkish Stream’
Russian gas deliveries to Europe via Ukraine, of which
pipeline would entirely remove Ukrainian gas transit
30.2 bcm was delivered to Northern Italy and 28.8
from Russian gas deliveries to Turkey.
bcm was delivered to Slovakia, Czech Republic,
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www.gpf-europe.com
Austria, Slovenia, Croatia, Bosnia & Hercegovina,
Hungary, Serbia, FYR Macedonia, and Greece1.
However, the South – to – North gas pipeline
infrastructure to deliver gas from Greece to these
target markets simply does not exist. Even if European
energy companies in these target markets were
willing to change their delivery points, there is
currently no way for Russian gas to be physically
delivered from the Greek-Turkish border to the
markets of Central Europe. Therefore, the success of
Turkish Stream (besides gas deliveries to Turkey and
Gazprom and Ukraine
The ‘winter package’
In accordance with the ‘Winter Package’ agreed on
the 30th of October 2014, Naftogaz is to pay in
advance for gas supplies from Gazprom. During
January, Naftogaz imported 0.9 bcm of gas from
Gazprom, for which it paid in advance. On the 3rd of
February, it was announced that Naftogaz had paid
$107m for 0.7 bcm of gas supplies at a price of $329
per thousand cubic metres, to be delivered during
February.
Greece), depends on European energy companies
constructing
new
pipelines
and
cross-border
interconnections solely for the purpose of receiving
A new dispute over gas supplies to the Donbass
Russian gas volumes, which they currently receive via
For 24 hours, between the 18th and 19th of February,
Ukraine. The construction of such new pipeline
Naftogaz suspended gas supplies to the conflict
infrastructure is something which Gazprom surely
regions of Donetsk and Lugansk in Eastern Ukraine
cannot take for granted.
(collectively referred to as the ‘Donbass’ region),
citing damage to pipeline infrastructure caused by the
Turkish Botaş receives 10 percent discount on gas
imports from Gazprom
conflict. From the 20th of February, Gazprom began
supplying these regions directly, stating that it would
subtract the delivery volumes from the ‘balance’ for
In an announcement that is probably not unconnected
which Naftogaz had paid in advance. From the 22nd to
to the recent Gazprom-Turkey negotiations over the
the 25th of February, Naftogaz claimed that Gazprom
Turkish Stream pipeline, the Turkish Energy Minister,
Taner Yildiz, confirmed that the Turkish state-owned
energy company, Botaş, has received a 10 percent
discount from Gazprom, bringing the price down to
$332 per thousand cubic metres. Gazprom Export
confirmed that negotiations had resulted in a ‘win-
was only delivering 34-40 percent of the agreed
supplies. Gazprom replied that gas delivered to
Donetsk and Lugansk was to be counted as part of
Naftogaz’s overall imports from Gazprom – if volumes
delivered to these regions were included, then
Gazprom was fulfilling its obligations.
win’ result for the two parties, but declined to give
concrete details.
Naftogaz then responded with the claim that this was
a breach of the interim agreement, which granted
Naftogaz, not Gazprom, the right to determine the
_____________________
1
border crossings at which Russian gas is delivered to
All data taken from ‘IEA Gas Trade Flows in Europe’
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Ukraine. Naftogaz then announced that it would make
although such a payment is expected.
no further advance payments until Gazprom proves
In a press release following the meeting on the 2nd of
itself willing to supply gas in accordance with the
terms of the interim agreement. The dispute quickly
escalated, with Gazprom warning that if further prepayment was not forthcoming from Naftogaz, then
the ‘balance’ would be used in the coming days, and
that supplies would then be cut off. However, on the
26
th
of February, Gazprom spokesman, Sergei
Kupriyanov, announced: "We are ready at the
moment to exclude our gas supplies to Donbass from
our discussions (with Ukraine)".
March, Šefčovič proposed another trilateral meeting
before the end of March. The two sides now have just
four weeks until the expiry of the ‘winter package’. If
no new agreement is reached at that point, the
previous contractual provisions will apply: Gazprom
will only supply gas for which Naftogaz has pre-paid (a
regime in place since June 2014), while the ‘winter
discount’ will be removed and the price will rise by
$100 per thousand cubic metres. The supply and
transit contract is valid until 2019, although it could be
The short-lived dispute was then resolved at a
revised following the outcome of the Gazprom-
tripartite meeting of the Russian Energy Minister,
Naftogaz arbitration tribunal, with the results of that
Alexander Novak, the Ukrainian Energy Minister,
case not expected until 2016.
Volodymyr Demchyshyn, the Naftogaz CEO, Andriy
Kobolyev, Ukraine, and the European Commission
Vice-President on Energy Union, Maroš Šefčovič, in
Gazprom and Belarus
Brussels on the 2nd of March. At that meeting, the
Gazprom Transgaz Belarus named ‘top taxpayer’ in
parties agreed that only gas delivered to the agreed
Belarus
border crossings would be deducted from Naftogaz’s
The Belarusian Ministry of Taxes and Duties has
prepaid balance.
announced that Gazprom Transgaz Belarus was the
However, the question of who will be responsible for,
largest taxpayer in Belarus in 2014, accounting for
and pay for, gas supplies to the Donbass region was
4.9% of the total budget tax revenues in 2014.
not made clear. Reports speculate that a ‘Transnistria’
situation could emerge: Gazprom could provide gas to
the Donbass region ‘for free’, but actually chalk up the
Belarus settles payments for Russian gas in roubles
debt to Naftogaz, just as Gazprom supplies Moldova’s
The Head of Financial and Economic Department of
breakaway region of Transnistria.
Gazprom, Andrey Kruglov, has announced that since
the end of 2014, Belarus has been making its
payments for gas supplies in Russian roubles, rather
Gazprom awaits advance payments for March gas
than US dollars. In light of the falling value of the
supplies as time runs out on the ‘winter package’
rouble in relation to the dollar, this amounts to a
Furthermore, by the 4th of March, Naftogaz had not
significant discount for Belarus, in comparison with
yet made a pre-payment for March gas supplies,
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EGF Gazprom Monitor
other European importers of Russian gas.
Belarus imported 20 bcm of Russian gas in 2014.
Gazprom’s gas imports and gas transmission are
controlled by Gazprom Transgaz Belarus – a whollyowned subsidiary of Gazprom. The price at which
www.gpf-europe.com
and Economic Department of Gazprom, Andrey
Kruglov. He also confirmed that Gazprom is currently
negotiating long-term loans with several Asian banks,
noting, “When it comes to Chinese banks, we may
announce good news in the near future”.
Gazprom exports gas to Russia is equal to the price of
In a related development, the Chinese independent
gas for domestic consumers in Russia’s Yamal-Nenets
ratings company, Dagong Global Credit Rating
region, plus the costs of transmission, storage, and
Company, granted Gazprom an ‘AAA’ (outlook: stable)
marketing. This means that, in effect, Belarus benefits
rating at the beginning of February, in contrast to its
from gas prices equal to domestic Russian consumers.
current ratings from Standard & Poor’s (BB+) and
Fitch (BBB-), which offer the outlook of ‘negative’.
Moody’s downgraded Gazprom from ‘negative’ (Baa3)
Gazprom to invest in Belarusian gas transmission and
gas storage
to ‘speculative’ (Ba1) on the 26th of February. The
positive outlook from Dagong is a boost for Gazprom,
Reports suggest that Gazprom is making plans to
at a time when it is seeking to attract investment and
invest $2-2.5bn in increasing Belarus’ gas transmission
loans from Asia. However, the granting of a rating that
capacity and a further $1-1.1bn in increasing Belarus’
is so out of line with those given by other ratings
gas storage capacity by 2020. Gazprom has yet to
agencies suggests that the Dagong rating may be
confirm details of its plans, but it is expected that the
politically-motivated, to allow Chinese companies to
move is part of Gazprom’s broader plan to increase
invest in Gazprom projects, as part of Gazprom’s ties
gas transport and storage capacity outside Ukraine,
with the China National Petroleum Corporation
for the delivery of gas to Europe.
(CNPC) and the Russia-China ‘strategic partnership’
more generally.
Gazprom in Asia
Gazprom seeks Asian investment and loans, receives
Gazprom promises exports to China still on schedule
top credit rating from Chinese agency
In early February, the Deputy Chairman of Gazprom
In the beginning of February, Gazprom held its first
(and former Director of Gazprom Export), Alexander
‘Investor Days’ in Asia. On the 3rd of February,
Medvedev, issued assurances that Gazprom is still on
Gazprom held an event in Hong Kong, and on the 5th
schedule regarding the development of gas exports to
of February, an event in Singapore.
China, and that the project will not be delayed by
Gazprom was listed on the Singapore Stock Exchange
in 2014, and is now seeking a listing on the Hong Kong
Stock Exchange, according to the Head of Financial
falling international oil and gas prices: “Regarding the
Chinese contract, no postponements are envisaged,
and the contract’s safety margin is sufficient to work
calmly and confidently”.
Issue 45: Feb. 2015 - Page 7 of 8
The
European
Geopolitical
Forum
www.gpf-europe.com
EGF Gazprom Monitor
Issue 45: Feb. 2015
Map of proposed ‘Turkish Stream’ pipeline to replace ‘South Stream’
th
Source: Gazprom, 2015. Alexey Miller and Taner Yildiz overfly intended route of onshore gas pipeline [press release], 7
th
February. Available at: http://www.gazprom.com/press/news/2015/february/article217568/ [Accessed 4 March 2015]
Disclaimer
The information presented in this report is believed to be correct at the time of publication. Please note that the contents of the report are
based on materials gathered in good faith from both primary and secondary sources, the accuracy of which we are not always in a position to
guarantee. EGF does not accept any liability for subsequent actions taken by third parties based on any of the information provided in our
reports, if such information may subsequently be proven to be inaccurate.
EGF Gazprom Monitor
Published by European Geopolitical Forum SPRL
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Issue 45: Feb. 2015 - Page 8 of 8