Russia Is Slowly Turning The NatGas Tap Off To Europe

Tyler Durden's picture

While Naftogaz (Ukraine's gas pipeline operator) states that all gas transportation from Russia to Europe is running normally, Bloomberg reports that Russian natgas exports to Europe are declining. Shipments are down over 4% from the prior week and also lower to Ukraine. This 'adjustment' follows increased sanctions by the West as Medvedev's notable statement this morning that Ukraine owes Russia $16bn.

NatGas output is tumbling

The good news:

Gazprom today said natgas transit to Europe via Ukraine, supplies for Ukrainian consumption  

But Pay Up...

Ukraine owes Russia $11b after collapse of 2010 deal, Russian Prime Minsiter Dmitry Medvedev says to President Vladimir Putin at Security Council meeting, according to transcript on Kremlin website.

 

Medvedev adds $3b Ukraine bonds bought in Dec., ~$2b debt to Gazprom for natgas supplies

 

NOTE: In 2010, Russia agreed to sell natgas at discount in exchange for extending lease to Black Sea naval port of Sevastopol in Crimea to 2042 from 2017

Or Else...

Russian natgas exports to Europe and Turkey, excl. former Soviet Union, declined to 405.3mcm as of March 22,  according to Bloomberg calculations based on preliminary data from Energy Ministry’s CDU-TEK unit.

 

Avg daily exports to region were ~457mcm in March, lower than yr earlier: calculations based on CDU-TEK data

 

Shipments March 16-22 were 3.04bcm, 4% decrease vs level in week ended March 15

It is too early to see a trend, but for now, the direction is not hopeful for Europe.

Furthermore, Gazprom has cut its Diesel output by the most in 7 months...

 

and then... (via NY Times),

Russia is now asking close to $500 for 1,000 cubic meters of gas, the standard unit for gas trade in Europe, which is a price about a third higher than what Russia’s gas company, Gazprom, charges clients elsewhere.

 

Russia says the increase is justified because it seized control of the Crimean Peninsula, where its Black Sea naval fleet is stationed, ending the need to pay rent for the Sevastopol base. The base rent had been paid in the form of a $100 per 1,000 cubic meter discount on natural gas for Ukraine’s national energy company, Naftogaz.

And if that's not clear enough...

 

Of course, not every country is as exposed as the chart above shows, however, as Reuters shows below, EU's eastern members depend very heavily on Russia...

Below are details of how some of the ex-Communist EU states are economically exposed to Russia:

BULGARIA

Imports from Russia accounted for 18.5 percent of Bulgaria's total imports last year, worth about $6.6 billion. Russia is Bulgaria's biggest source of imports.

Energy is the main import from Russia. Bulgaria gets about 90 percent of its gas from Russian firm Gazprom. Its only oil refinery, controlled by Russia's LUKOIL, works on Russian crude and its only nuclear power plant, which provides over 40 percent of electricity, operates two 1,000 MW Soviet-built reactors that work on Russian nuclear fuel.

Last year some 700,000 Russians were among Bulgaria's 2.6 million tourists. Tourism revenue makes up about 13 percent of annual gross domestic product.

CZECH REPUBLIC

In 2012, the latest year for which figures are available, 66 percent of Czech imports of natural gas came from Russia.

Exports to Russia in 2013 were worth $5.83 billion, and represented 3.67 percent of total exports. Imports from Russia were worth $7.80 billion.

Russia's largest steelmaker Evraz has a plant in the Czech Republic.

A consortium including Russia's Atomstroyexport is competing in a multi-billion dollar tender to expand the Temelin nuclear power plant. Russian firm TVEL supplies CEZ nuclear power units with fuel.

In 2013, Russians accounted for the second largest group of tourists coming to the Czech Republic with 759,000 people, or 10.4 percent of total tourists.

HUNGARY

Russia is Hungary's largest non-EU trading partner. Exports to Russia last year were worth 2.55 billion euros ($3.5 billion), of total exports worth 81.7 billion euros.

Hungary imports about 80 percent of its gas needs from Russia.

The government has signed an agreement with Russia's Rosatom to expand the Paks nuclear power plant that supplies about 40 percent of Hungary's electricity.

Russia is Hungarian drug maker Richter's biggest market. The company has warned first quarter profit will fall due to the rouble's slide.

LITHUANIA

About one fifth of Lithuanian exports go to Russia, though a large part of this is "re-exports," meaning that Lithuanians are importing the goods from a third country and then shipping them on to Russia.

* Lithuania and its industry are almost totally reliant on Russia for energy resources.

POLAND

Russia accounts for 90 percent of Poland's oil imports and more than half of its gas.

Russia is Poland's second largest trade partner, with combined 2013 imports and exports accounting for 8.8 percent of foreign trade, worth $36 billion.ROMANIA

Romania's exports to Russia totalled 1.3 billion euros ($1.8 billion) in the first 11 months of 2013 or 2.8 percent of overall exports. Romanian imports from Russia were 2.1 billion euros in January-November 2013, representing 4.2 percent of total imports.

Romania is much less dependent on imported gas than other countries in the region. Romanian gas fields provide about 80 percent of domestic needs, and President Traian Basescu said that if Russia cuts gas deliveries, the effects will not be substantial.

SLOVAKIA

Exports to Russia in 2013 were worth 2.55 billion euros ($3.5 billion), or 3.96 percent of total exports. Imports from Russia were worth 6.15 billion euros ($8.5 billion)

Fuel for two nuclear power plants is imported from Russia. Russian firm Rosatom has been in talks to take part in constructing new nuclear power units in Slovakia.

Slovakia is nearly 100 percent reliant on Russian gas, and its budget revenues depend on the tariffs it charges for Russian gas crossing its territory.

SLOVENIA

Slovenia is among the EU countries with the largest surplus in trade with Russia. It exports some 1 billion euros of goods and services to Russia per year, about 4.6 pct of total exports.

For Slovenia's largest listed company, pharmaceutical firm Krka, Russia is the biggest single market. Krka has a factory in Russia and last year sold products worth 300 million euros ($413.5 million) to Russia, a quarter of its total sales.