A long-term contract for the transit of Russian gas is crucial for Ukraine, which needs money to maintain its pipeline network, the country’s gas transmission system (GTS) operator says.
“We need a long-term contract that will cover our operational needs,” head of GTS Ukraine Sergei Makogon said on Tuesday.
Makogon stressed that servicing the country’s gas transmission system is expensive, being an enormous infrastructure with thousands of workers. Therefore, it will be difficult for Ukraine to maintain it “without significant long-term commitments,” he stressed.
Kiev strongly opposes the launch of Russia’s newly constructed Nord Stream 2 pipeline, fearing Moscow could scrap the transit contract with Ukraine and switch entirely or in part to the new system.
“Nord Stream 2 and Turkish Stream 2. What should Europe do? Investigate the abuse of dominance. Show solidarity. Answer resolutely. Protect transit through Ukraine. Do not give exceptions to EU rules,” read the presentation to Makogan’s speech at the conference.
Russia, however, repeatedly stated that it will respect commitments under the gas transit deal with Kiev. At the end of 2019, Russia and Ukraine signed a raft of agreements on the continuation of gas transit through Ukraine’s territory, including a five-year transit contract, according to which Russia’s state energy major Gazprom guaranteed the pumping of 65 billion cubic meters of gas during the first year and 40 billion cubic meters of gas annually over the next four years.
The head of Gazprom, Alexey Miller, recently said that the company is ready to continue gas transit through Ukraine after 2024, depending on economic feasibility and the technical condition of Ukraine’s gas transportation network. At the same time, he pointed out that the volumes of transit will have to be adjusted to the new volumes of purchases of Russian gas by EU states with consideration of Nord Stream 2 contracts.
The new Russian pipeline is awaiting EU certification to launch deliveries. The process could take up to four months due to bureaucratic procedures in Brussels as well as opposition to the project from Washington and some Eastern European states.
Natural gas prices in Europe hit record highs in Tuesday’s trading, exceeding $1,000 per 1,000 cubic meters for the first time in history, data from the Intercontinental Exchange (ICE) shows.
The price of October futures on the Dutch TTF exchange surged to $1,031.30 per 1,000 cubic meters, with the overall increase in gas prices since the beginning of the trading day exceeding 11%. The price of November futures on the TTF has reached almost $1,040 per 1,000 cubic meters.
European gas prices may continue to rise and break new records in the event of a cold winter and a physical shortage of gas on the market, according to international rating agency Fitch.
“The main test for gas prices and consumers will be in winter – in case of cold weather and physical shortage, prices may soar even higher than now,” Dmitry Marinchenko, the senior director of the group for natural resources and commodities at Fitch, told TASS.
Russian experts had warned that gas prices could surge due to a number of factors, including demand in Asia, the weather in Europe and the coming winter season, as well as the timing of the launch of Russia’s Nord Stream 2 pipeline. Low gas-storage volumes across the continent and unusually high demand for the current season also add to the prospects of record highs on the European gas market.
According to the chairman of Russia’s Gazprom, Alexey Miller, growing demand in Europe and a lag in filling underground storage facilities will continue to push natural gas prices higher.
Sergey Komlev, the department head at Gazprom Export, said that pipeline gas supplies from Russia to Europe this year are at historic highs, with Gazprom increasing gas production by 18.4% year-on-year.
At the same time, the European gas market in the first half of 2021 faced an outflow of liquefied natural gas (LNG) to the Asia-Pacific and South American markets, with its share in imports dropping from 41.5% to 31%. In absolute terms, LNG supplies to Europe during this period decreased by 10.74 billion cubic meters (15.9%).
The new AUKUS submarine pact between the US, UK and Australia, which saw France lose a major ship-building deal with Canberra last week, has led to a verbal fire exchange and diplomatic snubbing between Washington and Paris.
On the Keiser Report, Max and Stacy discuss the possible outcome of the standoff, predicting France to come out as a winner, backed by the whole European Union, while the post-Brexit UK and “bad crazy island” of Australia don’t stand a chance, even with the US behind them.
Facebook said this week it is “pausing” its Instagram Kids project in order to “work with parents, experts and policymakers to demonstrate the value and need for this product.”
The announcement came amid growing opposition for the project and criticism that Facebook has knowingly ignored its own research showing that Instagram is toxic to the mental health of younger people.
Boom Bust’s Ben Swann explains the latest developments.
Iran and Venezuela have struck a deal to swap heavy Venezuelan crude for Iranian condensate, Reuters has reported, citing unnamed sources familiar with the deal.
According to these sources, the swaps are set to begin this week and last for six months, although they could be extended. The imports of Iranian superlight crude will help Venezuela revive its falling oil exports amid US sanctions that, among other problems, have cut off the country’s access to the light oil that is used to blend with its superheavy to make it exportable.
For Iran, the deal will bring in heavy crude it could sell in Asia, the Reuters sources also said. The diluted Venezuela crude will also likely go to Asian buyers.
Reuters also reported that, according to the US Treasury Department, the deal could constitute a breach of sanctions, to which both Venezuela and Iran are subjects.
“Transactions with NIOC by non-US persons are generally subject to secondary sanctions,” the Treasury Department said in response to a Reuters request for comments on the deal. It added that it “retains authority to impose sanctions on any person that is determined to operate in the oil sector of the Venezuelan economy.”
Despite the sanction noose, Venezuela has been ramping up its oil exports, generating vital revenue. According to a recent Reuters report, the country, which is home to the world’s largest oil reserves, exported more than 700,000 bpd of crude in July—the highest daily export rate since February.
Most of the oil went to China and Malaysia, although the latter is usually only a stop along Venezuelan oil’s trip to China. The same report noted that three of the five crude oil blending facilities in the Orinoco Belt were operational, and another crude upgrader was preparing to restart operations after a year’s pause.
Iran, meanwhile, recently revealed plans to attract some $145 billion in oil and gas investments from both local and foreign sources.
“We plan to invest $145 billion in the development of the upstream and downstream oil industry over the next four to eight years, hence I welcome the presence of domestic and foreign investors in the industry,” Javad Owji, Iran’s new oil minister, said during a meeting with executives from China’s oil giant Sinopec.
