Russia grants waiver for LNG supplies from Yamal LNG to former Gazprom unit
26th May 2022 11:34 GMT

Russia has granted a 90-day waiver for continued supplies from the Yamal LNG plant to a trading company formerly owned by state-controlled Gazprom, a Russian government decree published May 25 showed.

 

Moscow on May 11 listed former Gazprom subsidiary Gazprom Germania and dozens of its subsidiary companies in a new sanctions designation in response to EU measures against Russia.

The move prohibited Russian entities from dealing with Gazprom Germania and its subsidiaries, which were taken under temporary German state control at the start of April.

One of the affected companies is Gazprom Marketing & Trading Singapore, which has a contract to offtake 2.9 million mt/year of LNG from the Novatek-operated Yamal LNG plant in northern Russia.

Without a waiver, Yamal LNG would have been banned from transacting with any of the sanctioned companies, including Gazprom Marketing & Trading Singapore.

According to the government order signed May 25, activities related to deliveries by Yamal LNG to Gazprom Marketing & Trading Singapore will be temporarily exempted from the sanctions.

"The order comes into force from the day of signing and is valid for 90 calendar days," it states.

The supply contract with Gazprom Marketing & Trading Singapore is on a free-on-board basis, meaning the company can deliver the cargoes to any destination it chooses.

It also provides for transshipment of cargoes from dedicated ice-breaker vessels to conventional LNG tankers at the Belgian port of Zeebrugge for onward shipment.

A Novatek spokesperson on May 26 referred S&P Global Commodity Insights to the published government decree, while Gazprom Marketing & Trading could not be reached for comment.

 

Key LNG source

 

Yamal LNG is a key source of LNG to European and global markets with a production capacity of 17.4 million mt/year (24 Bcm/year). It has three trains each with a 5.5 million mt/year capacity, plus a smaller 0.9 million mt/year fourth train.

Russia was the third biggest LNG supplier to the EU last year with 16 Bcm of deliveries, according to data from the European Commission, behind only the US (22.3 Bcm) and Qatar (16.3 Bcm).

The EU has pledged to reduced demand for Russian gas by two thirds by the end of 2022 through higher LNG supplies from the global market, increased biomethane production and energy efficiency.

Lower Russian pipeline gas flows have, however, contributed to the recent European price strength, while Europe also faces competition from Asia for LNG cargoes.

Both European and Asian gas prices remain high, with the Dutch TTF month-ahead price assessed by Platts from S&P Global Commodity Insights on May 25 at Eur86.65/MWh ($27.11/MMBtu), 250% higher year on year.

The Platts JKM spot Asian LNG price, meanwhile, was assessed May 25 at $23.11/MMBtu, 125% up on the year.

 

German control

 

The German regulator, the Bundesnetzagentur, took on the role of Gazprom Germania shareholder at the start of April after Berlin said it had not approved the sale of the unit by Gazprom to a third-party company called Palmary.

Gazprom said on April 1 that it had terminated its participation in Gazprom Germania and all of its assets on March 31, in a move that took the German authorities and the gas market by surprise.

Gazprom Germania was a 100%-owned subsidiary of Gazprom Export, itself a wholly owned unit of Gazprom.

European assets held under the umbrella of Gazprom Germania include trading and storage companies such as Gazprom Marketing & Trading, Switzerland-based Gazprom Schweiz, Germany-based traders WIEH and Wingas, and storage operator Astora.

A total of 31 former Gazprom subsidiaries based across Europe were listed on the new Russian sanctions designation on May 11.


Bunkerworld .,
26th May 2022 11:34 GMT