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Russia Gazprom deal with China controversy
Topic Started: Aug 18 2015, 10:55 PM (80 Views)
MSantor
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A fatal misstep for this gas giant?

Business Insider

Quote:
 
Gazprom's colossal deal with China is already looking like a terrible move for Russia

MIKE BIRD

Aug. 17, 2015, 3:50 AM57,096 36

There was a lot of excitement in the industry when the Russian energy giant Gazprom announced a mammoth $400 billion (£256 billion), 30-year export deal to China in May 2014, but the agreement is now coming under extreme pressure on numerous fronts.


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Here's part of the note from Morgan Stanley on Monday morning:

According to a recent Interfax report, this contract was only activated on May 13 (2015) – seven months after the initial deadline. This means that exports from Russia can begin no earlier than in May 2019. The final deadline for the project coming on line is now May 2021. At the same time, in late July, China reportedly suspended a second pipeline, this one planned to pump 30 bcm per year from Western Siberian gas fields to China’s northern-western Xinjiang region.

It's not the first problem that's been noted for the Gazprom deal. Last week, a Financial Times report noted that the deal offered Gazprom, which is majority-owned by the Russian government, no protection against a prolonged period of lower oil prices. According to analysts the FT spoke with, at current oil prices the project is unprofitable or even loss-making for Gazprom.

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Business Insider

Quote:
 
Russia's gas giant 'is confronted with the greatest challenge in its history'
AFP
GERMAIN MOYON, AFP
Aug. 17, 2015, 9:12 AM

Moscow (AFP) - Facing a cold shoulder from Europe and increased competition at home, Russia's Gazprom has struggled to assert dominance on the global energy market, prompting speculation the energy giant could have no choice but to splinter.

With the Russian economy slipping into recession on the back of lower oil prices and Western sanctions over Ukraine, the economy ministry predicted Gazprom would produce 414 billion cubic metres of gas this year, an all-time low for the public company sitting atop some of the world's largest natural gas reserves.

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Gazprom is now grappling with a series of issues, including its recent loss of the Ukrainian market, Europe's energy diversification efforts and increased competition on the domestic market, which jeopardise its status as a gas giant.


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Edited by MSantor, Aug 18 2015, 11:37 PM.
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