LNG

Russian natural gas company Gazprom said it had halted supplies to China through the “Power of Siberia” pipeline running from Russia’s Far East into China’s northeast Heilongjiang province.

Natural gas demand growth in China, including LNG deliveries, is forecast to slow considerably, falling to 2 percent per annum between 2021 and 2030 compared with an average growth rate of 12 percent per annum between 2010 and 2021.

Russian President Vladimir Putin and the head of Gazprom have held talks in Vladivostok with Mongolian Prime Minister Luvsannamsrai Oyun-Erdene at the Russian-organized Eastern Economic Forum amid efforts by Russia to push forward with a natural gas pipeline to China across Mongolia, which is sandwiched in Central Asia between both big powers.

Russian pipeline natural gas supplier Gazprom said it produced 514.8 billion cubic metres in 2021 and bettered the 2020 output volumes by 62.2Bcm as the company boosted volumes to Europe and China and forecast record financial results.

Gazprom said the Svobodny thermal power plant has started up to serve the Amur Gas Processing Plant, one of the world’s largest and part of the “Power of Siberia” project comprising pipeline gas for China and LNG for trucks transporting liquid helium as a new Russian Far East export.

China confirmed that 2020 liquefied natural gas imports hit a record as energy needs continued to grew even after the slowdown in the first half caused by the Covid-19 pandemic.

Gazprom, the largest supplier of pipeline natural gas to Western Europe and a main competitor to LNG, posted a nine-month net loss because of the weak Russian currency and as revenues and prices also tumbled in Western European.

Gazprom’s total sales decreased by 139 trillion Russian roubles ($18.27 billion), or 25 percent, to 4.30 trillion roubles ($56.27Bln) for the nine months to the end of September.

“The change was mainly due to a decrease in average prices and volumes of gas sold in the ‘Europe and other countries’ segment,” said Gazprom in its earnings statement.

Gazprom posted a nine-month loss of 218.37 billion roubles ($2.86Bln) compared with a net profit of 1.05 trillion roubles ($13.72 billion) in the first nine months of 2019.

“The balance of foreign exchange differences reflected within the item ‘net finance (expenses) income’ produced a loss to the amount of 749.45 billion roubles for the nine months ended September 2020 compared to the gain in the amount of 230.81Bln roubles for the same period of the prior year. This fact had a major impact on the financial result of the Gazprom Group,” state the Russian company.

By the end of the nine-month reporting period at the end of September 2020, the rouble had dropped to a five-year low against the euro.

Net sales to Europe dropped to 1.13 trillion roubles ($14.83Bln) in the nine months from 1.88 trillion roubles ($24.67Bln) in the prior-year period.

Volumes sent to European pipelines also tumbled to 154.4 billion cubic metres, but still totalled just less than the entire LNG output of Australia and Qatar combined.

Gazprom said the average price charged in Europe dropped by around 34 percent in the period to 9.165 roubles ($120) per million cubic metres versus 13,966 roubles ($183M).

The company’s net sales to former nations of the former Soviet Union amount to 199.54 billion roubles ($2.61Bln).

The volumes amounted to 21.3 Bcm compared with 171.4 Bcm in the same nine months of 2019.

Pipeline natural gas sales in the Russian Federation during the period brought in revenues of 622.88 billion roubles ($8.15Bln) compared with 666.12Bln roubles ($8.72Bln) in the prior year period.

The volumes were just short of the total sent to Europe and came in at 151.1 Bcm versus 162.9 Bcm in 2019.

The average sales price for pipeline gas in the Russian Federation was less than half that for Europe at 4,122 roubles ($54) per mcm and little changed from 2019 when it was 4,089 roubles per mcm.

Gazprom is an LNG exporter, though on a limited scale of around 10 million tonnes per annum from the Sakhalin joint venture in the Russian Far East. The cargoes are mostly supplied under contract to Japanese utilities.

Gazprom also sells refined products, oil and natural gas condensate. Gazprom's new sales flow to China since the start of 2020 is still at a very low level in volume terms of 5 Bcm and is not mentioned in the earnings. 

China's liquefied natural gas imports increased by 25 percent in October, though were still short of the monthly shipments received by the world’s No. 1 LNG importer Japan as the Japanese are failing to reach nuclear re-start targets as a replacement power generation fuel.

A Japanese report has stated that liquefied natural gas and pipeline gas still account for a relatively small share in the energy mix in Asia and have plenty of room to be expanded to replace the current “massive coal consumption” by Asian nations. 

China Gas Holdings, the largest independent Chinese city-gas distributor and owner of 555 filling stations for gas-powered vehicles, posted a surge in fiscal first-half net profits and had over US$3.5 billion in revenues as Beijing’s “Blue Skies” anti-pollution policies helped increase natural gas use and LNG imports.