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    Gas Exporters Call for EU Market Free from Restrictions

Summary

A Russian backed gas conference in Berlin heard the arguments for allowing Nord Stream 2 and calling for a level playing field for energy.

by: William Powell

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Gas Exporters Call for EU Market Free from Restrictions

Gas markets should be free from restrictions and unilateral sanctions, the Gas Exporting Countries Forum head Yuri Sentyurin told a conference in Berlin May 16.

"The UN is the only organisation authorised to introduce such measures and all other measures are illegal and create uncertainty in exporters and importers," he told delegates at the 'Prospects for Russia-EU energy co-operation: Gas aspects,' event, which was organised by the Russian Gas Society, 

Sentyurin spoke in response to the threat, voiced several times by Richard Grenellthe US ambassador to Germany, that the US will impose sanctions on companies providing financial support for Nord Stream 2 (NS2).

His remarks were echoed by Klaus Ernst. The chairman of the German parliament's committee on economic affairs and industry criticised the US ambassador for his bullying attitude.

"The US is pursuing a very aggressive policy for their own interests. We in our committee have a very heated debate how to ... respond to this unacceptable pressure from the US." It is not acceptable, he added, for the US to treat Germany as a colony and to attempt to exclude it from the US market.

"Relations must be normalised," Ernst concluded.

Russia's deputy energy minister Anatoly Yanovsky said there are also problems with regulations in the European Union. He said this creates "artificial" uncertainty that is not the result of actions by existing suppliers. "Good faith competition remains a slogan," Yanovsky said.

The head of Gazprom Export, and now also deputy chairman of the management board, Elena Burmistrova said that the decision to close the Dutch Groningen field completely from 2030 raised the question of what would replace it and on what terms. She said nobody could argue with the claim that LNG is a flexible pipeline, which is both a strength and a weakness. Free on board contracts meant the gas can go anywhere, but as the oil price rises, so LNG will go to Asia.

Pipeline gas in Europe is, however, competitively priced, she insisted, noting Gazprom is selling more gas on the spot market. In September Gazprom Export started selling via an electronic sales platform on which the price closely tracks the Dutch title transfer facility, and 3.5bn m3 has been traded, she added.

This year, Gazprom Export's sales to Europe are likely to be down on last year's record, but the main factor will be the weather, she said. LNG imports have been much higher since the start of Q4 2018 when the Asian gas market lost its premium, and storage in Europe is filling up fast. Observers say that by September, European facilities will be full if there is no let-up in injection rates by then.

She also explained that Gazprom is building NS2 because it takes its contractual responsibilities to deliver seriously, and NS2 will be a more efficient route. "Pipelines do not last forever," she said. Gazprom needs more northerly routes to deliver its gas from its more northerly production bases, as the old western Siberian fields decline, she added.

One of the companies financing NS2, Germany's Uniper, is keeping its gas purchasing options open. Chief commercial officer Keith Martin told the conference that NS2 will help to diversify the market by bringing more transport options, while not making the EU more reliant on Russia.

"It enhances security of supply," he said, "and so it is very important and we are fully committed to it today." But when it makes sense to do so, Uniper will also buy LNG, he said. The company is now planning to build an LNG import terminal in the north German port of Wilhelmshaven.

Uniper is the biggest gas retailer to German customers, having been carved out of the E.ON Ruhrgas enterprise. It is Gazprom's biggest customer and also the biggest buyer from the Groningen field.