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Gazprom still eyeing Nord Stream 2 completion by end-2020/start-2021

June 23/2020

MOSCOW (MRC) -- Construction of the 55 Bcm/year Nord Stream 2 gas pipeline from Russia to Germany is still set to be completed at the end of 2020 or the start of 2021, a senior official at Russian gas giant Gazprom said June 22, despite the threat of expanded US sanctions against the project, reported S&P Global.

Gazprom's head of investor relations, Anton Demchenko, told investors the company continued to pursue its completion.

"I can briefly confirm that we continue to work on this project and expect that its construction will be completed at the end of 2020 or the beginning of 2021," he was quoted as saying by the RIA Novosti news agency.

Gazprom could not be immediately reached to confirm the comments, which are in line with remarks by Russian President Vladimir Putin in January who said the pipeline would be completed by the end of 2020 or in the first quarter of 2021.

Just 160 km (99 miles) of Nord Stream 2 is left to lay in Danish waters out of the total 2,460 km length.

The Gazprom-owned Nord Stream 2 development company had hoped to bring the project online by the end of 2019, but first permitting issues in Denmark and then the US sanctions meant the project has been delayed.

The 55 Bcm/year pipeline is crucial to Russia's plans to scale down from 2021 the use of the Ukrainian transit corridor in its gas supplies to Europe.

With the uncertainty over how the line will be finished, the US is also pressing to introduce expanded sanctions against the project.

At the start of June, a new US Senate bill was introduced that aims to block completion of the project by expanding existing sanctions to target more companies involved in laying the line's final segment, including insurers and service companies.

Nord Stream 2 has also been fighting for an exemption from the amended EU Gas Directive and has now appealed against a May 15 ruling by the German regulator Bundesnetzagentur that rejected a request for a waiver.

Nord Stream 2 in January asked the regulator for a derogation from the EU's amended gas directive rules, which came into effect in May 2019.

Such a derogation would have allowed the German section of the pipeline to be exempted from third-party access and unbundling rules, and requirements on transparent tariffs.

However, the regulator ruled that Nord Stream 2 had not been completed by the time the amendments came into force, meaning the pipeline was not eligible for a waiver.

"Nord Stream 2 has filed an appeal to the Higher Regional Court in Dusseldorf against that decision," Nord Stream 2 said in emailed comments June 22.

"Nord Stream 2 maintains that on the effective date of May 23, 2019, the pipeline had been completed from the perspective of economic functionality," it said.

"Based on the applicable legal framework at that time, the company had made irrevocable investments worth billions of euros long before the European Commission announced its plan to amend the Gas Directive."

Separately, Gazprom Export's head of pricing, Sergei Komlev, told investors June 22 that the company expected its average gas export price in 2020 to be USD130-USD140/1,000 cu m.

That is in line with a previous estimate by Gazprom in April of around USD133/1,000 cu m.

Komlev, cited by Russian news agencies, also said Gazprom was in talks with some long-term contract holders about price revisions, but that there was no plan for a serious revision given changing long-term market conditions.

As MRC reported earlier, Denmark expects to rule "within four weeks" on a request from the developer of the Nord Stream 2 gas pipeline from Russia to Germany for permission to lay the line in Danish waters using ships with anchors, a spokesman for the Danish Energy Agency said June 17.

We remind that Gazprom neftekhim Salavat shut down its dioctyl phthalate (DOP) production for a scheduled maintenance. Market participants and a plant"s representative said Gazprom neftekhim Salavat took off-stream its DOP production for a long scheduled turnaround. The outage began on 12 May and will last for about 30 day.

According to MRC's ScanPlast report, Russian producers of unmixed PVC decreased capacity utilisation in April. However, Russia's overall PVC output totalled 351,000 tonnes in January-April 2020, up by 2% year on year.


mrcplast.com
Author:Margaret Volkova
Tags:Europe, PVC, DOP, SPVC, gas processing, Gazprom, Gazprom neftekhim Salavat, Denmark, Rossiya, USA.
Category:General News
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