Oct 16, 2021
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“Gazprom” is bursting with money, but what is it to us?

Photo: TASS / Grigory Sysoev

Gazprom’s revenues from the export of pipeline gas in January-August doubled in annual terms – up to $ 28.4 billion, follows from the data of the Federal Customs Service (FCS). At the same time, the export price of gas in August increased by 15.2% versus July – to $ 282.4 per thousand cubic meters, and the physical volume of gas exports in January-August increased by 11.7% compared to the same period in 2020 – to 140 , 6 billion cubic meters.

According to the Federal Customs Service, in August, the gas monopoly’s export revenues increased by 36.3% compared to July, to $ 4.74 billion. At the same time, only in August, the volume of exports increased by 18% in monthly terms, up to 16.8 billion cubic meters. Compared to August 2020, Gazprom’s revenues almost tripled, while the volume of exports decreased by 2.3%. A year ago, one thousand cubic meters of gas cost $ 92.65.

It is also noted that the price of export pipeline gas in August this year was significantly higher than the level of profitability of the company’s gas exports, which experts estimate at $ 90-100 per thousand cubic meters. If in May the price was $ 199.7 per thousand cubic meters, then in June – $ 226.5, and in August – $ 245.1.

Taking into account the average reporting prices of Gazprom, the total cost of gas transportation from Yamal to Greifswald at the entrance to the German GTS may be about $ 90 per 1,000 cubic meters. This amount includes the cost of production, MET, transportation across Russia and then along the Nord Stream pipeline. In addition, to this value, it is also necessary to add a 30% export duty on the sales price of the company in Europe.

However, it should be taken into account that Gazprom pays in full to its subsidiaries for transportation across Russia, and half to itself for transportation through Nord Stream. In addition, the cost of transportation within the Russian Federation differs for different gas pipeline systems, depending on the age of commissioning, and the cost of production differs for different fields. Other export routes, such as transportation through Slovakia and the Czech Republic to Germany, will be much more expensive due to the need to pay for transit countries.

One way or another, no one doubts that following the results of the current energy crisis in Europe, Gazprom will win in any case. But is this a serious gain? And is it natural? After all, everything is logical: sales have grown, incomes have grown …

– Everything is logical, you just need to take into account one more important fact: last year for Gazprom was daunting, – notes expert of the analytical portal Alexey Ilyashevich

– Then gas prices in Europe hit the bottom, the volumes of supplies decreased (even along the Ukrainian route, Russia did not pump as much as it should, and still paid money for transit). So this is a race, as they say, from a low start. Gazprom is confidently recovering the losses it incurred last year.

JV: – If we take into account that Gazprom pays for transportation in Russia in full to its subsidiaries, and half of itself for transportation via Nord Stream, moreover, the cost of transportation within the Russian Federation differs for different gas pipeline systems in Depending on the age of commissioning, and the production cost differs for different fields, how much does Gazprom save? Are other routes much more expensive?

– It’s hard to say, since Gazprom is reluctant to disclose such information. Because of this, the ground for speculation appears. For example, Serhiy Makogon, the head of the GTS Operator of Ukraine (OGTSU) company, claims that the transit of Russian gas through Ukraine for Hungary is the most profitable option. But how does he know on what conditions the Hungarians signed a contract with Gazprom? He has never seen this contract.

In any case, the absence of a transit country is a big plus. Not only economic, but also political (negotiations on transit with the same Ukraine have always been a source of headache for the leadership of the Russian Federation). In addition, Nord Streams are focused on a different resource base. Not to the Nadym-Pur-Taz region, from where gas is exported through Ukraine, but to Yamal. These are new, more attractive deposits. To quote Andrey Konoplyanik, General Director of Gazprom Export: “Moving from Nadym-Pur-Taz northward to Yamal with our resource base, we are shortening export routes to Europe by almost 2,000 kilometers”.

“SP”: – How long will Gazprom have to pay Ukraine for transit?

– We’ll have to pay until 2024. And we’ll see. Russia is playing for a long time, it faces a strategic task: to leave Ukraine with the minimum possible transit volumes (10-15 billion cubic meters). But if the demand for gas continues to grow and prices remain high, why not use this route additionally? Let Europe increase the volume of imports of Gazprom’s products – then the problem will be solved by itself.

“SP”: – How else can incomes grow in connection with the situation with prices in the European markets? Will there be new long-term contracts as well?

– Quite possible. After the Hungarians, for example, Slovaks can conclude an agreement with Gazprom. There are prerequisites for this. But I fear that Europe will not heed Putin’s call for a return to long-term contracting practices that will save both suppliers and consumers from new shocks. Rather, there will be new attempts to gain “energy independence” from Russia, a new flurry of investments in alternative sources etc. In the long term, this crisis is unlikely to benefit Gazprom.

“SP”: – How long will this income growth continue? And what then, when the crisis in Europe is over? Has income dropped?

– It is clear that prices will be high, at least until spring. That is, for another six months, Gazprom will definitely enjoy a favorable price environment. What’s next? Nobody knows. As practice shows, the situation can change very dramatically. The Europeans last year thought ultra-low gas prices were a long-term trend, and they forced Gazprom to tie its long-term contracts to the spot market. Who would have thought that everything would turn upside down in 2021? And that is exactly what happened. All factors are now playing in favor of gas suppliers. In the same way as a year earlier, consumers won in all respects.

SP: – How will this income growth affect the Russian economy and the welfare of ordinary Russians who do not work in the energy sector?

– The winners will definitely be the shareholders, whom Gazprom can generously present with dividends. And where the rest of the money will go, I honestly have no idea.

– Gazprom’s revenues from gas sales to Europe have grown in the last month, but expenses have also increased, – I am sure Director of the EAEU Institute Vladimir Lepekhin

– Moreover, the growth in income is temporary, provoked by the unpredictability of the fate of SP-2 at the launch stage, and the growth in expenses has a long-term tendency … Unfortunately, not only Russian gas and tax officials consider Gazprom’s income, but also European officials, and they will not give get excess profits on gas supplies to Europe. Today, the goal of these officials is to force the Russian leadership to formalize SP-2 as a collective property of suppliers and consumers, and I am afraid that EU officials will ultimately impose such a formula on Gazprom, since the latter is in terrible dependence on both gas, and from their own focus on the raw material economy.

“SP”: – How long will the rise in gas prices continue?

– The sharp rise in the cost of gas in the EU countries is situational. It was provoked by problems in Gazprom’s relations with transit through Ukraine, aggravation of relations between Russia and Turkey (and, consequently, negative expectations for Turkish Stream), unpredictability, I repeat, the prospects of SP-2 after the parliamentary elections in Germany and the departure of Merkel. , as well as the onset of the winter period. But as soon as Putin showed his readiness to pass gas through Ukraine in the same volumes, the gas price collapsed by one and a half times … In short, the joy of Gazprom is premature: the EU will still promote it to “share” the profits with the EU countries. In addition, one should not forget that the IMF, the World Bank and other Western structures are instructing the Russian “fifth column” to invest in “green energy” – just so that Russia would invest insane amounts of money in this clearly unpromising direction for the Russian Federation.

The commissioning of the SP-2 will have an insignificant effect on the growth of Gazprom’s revenues. Simply because an increase in gas pumping to Europe through SP-2 will be accompanied either by a decrease in its pumping through Ukraine, or by an increase in tariffs for this pumping, and most importantly, a part of Gazprom’s profits will inevitably be squeezed out in favor of European “partners”.

“SP”: – What will this money go to? How will this income growth affect the Russian economy?

– The profit from the sale of gas, regardless of its value, will, as always, go initially to purchase foreign currency, and then partly remain offshore, partly go to the purchase of imported products, and partly go to bonuses for top managers of Gazprom. The federal budget will receive almost nothing from the growth of Gazprom’s revenues.

“SP”: – What about the welfare of ordinary Russians who do not work in the energy sector? Do we all care about this growth?

– Even more so, ordinary citizens of Russia will not get anything from the growth of Gazprom’s income. On the contrary, in 2022, the majority of citizens will face even more ruin. Firstly, it is planned to increase the payment for housing overhaul by 25%, pensions will not be indexed, it is also planned to increase tariffs for housing and communal services, prices for basic goods will continue to rise, and the bank interest rate on mortgages has already increased. Russians will be obliged to continue paying for vaccinations and tests for covid, the scale of fines and sanctions against small businesses and individual entrepreneurs will increase, etc. In general, next year the standard of living of the majority of citizens is expected to fall by at least 10%.

If during this period there is a cumulative increase in Gazprom’s income, only that 1% of Russian citizens who increased their personal wallets in 2021 alone by about $ 60 billion in aggregate will get rich from this. This is how the Russian economy works today, in which the super-rich are obliged to get rich and the poor to become beggars.

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