The government instructed Gazprom to ensure a priori loss-making LNG supplies to Kamchatka

The government decided that it was Gazprom that would provide a priori unprofitable gas supplies to Kamchatka. The company will have to supply gas from its LNG plant on Sakhalin. At current LNG prices on the world market, Gazprom, selling gas to consumers in Kamchatka at a regulated rate, will lose about 11 billion rubles. in year.

The government instructed Gazprom to conclude an agreement on the supply of liquefied gas from the Sakhalin-2 project to the Kamchatka Territory by the end of the first quarter of 2024 (shareholders are Gazprom, Japanese Mitsui and Mitsubishi). This is stated in the approved “road map” gasification of the region until 2025. The issue of providing Kamchatka with gas (needs are estimated at about 1 billion cubic meters) has been resolved for a long time. The main difficulty is the lack of the necessary resource base in the region itself, as well as regulated tariffs, which make LNG supplies to the region unprofitable.

The only producers of liquefied gas in Russia – Gazprom and NOVATEK – did not agree to provide Kamchatka with gas at a loss, pointing to the lack of free volumes in the portfolios of their plants.

NOVATEK CEO Leonid Mikhelson said at the beginning of last year that the company is ready to find the necessary volumes, provided that it provides the raw material base necessary for making investment decisions on the construction of new LNG capacities. In particular, they talked about Gazprom’s Tambeyskoye field. In addition, the company claimed to buy a stake in Sakhalin-2 from Anglo-Dutch Shell, which left due to sanctions, but the issue has not yet been resolved. Already within the framework of SPIEF this year, Leonid Mikhelson explained that, given the necessary resources, the company would be able to supply 400-500 million cubic meters of gas to Kamchatka at a regulated price, but “we were not provided with any fields.”

Now, according to the roadmap, the Ministry of Energy, the Ministry of Economy, the Federal Antimonopoly Service and Gazprom, by the end of 2023, must determine the sources of funding to compensate for the difference between the economically justified price for LNG, its transportation and regasification and the regulated wholesale price set by the Federal Antimonopoly Service. Then, in the first quarter of 2024, the departments concerned must change a number of provisions for state regulation of wholesale prices for liquefied gas for the needs of all consumers in the region. And before the third quarter of 2025 – to determine the wholesale price for regasified LNG for the region.

Now the wholesale price for gas in Petropavlovsk-Kamchatsky is set at 7.3 thousand rubles. per 1 thousand cubic meters, from July 2024 it will be indexed by 8%. For comparison, at current LNG prices in Northeast Asia (about $400 per 1,000 cubic meters), the price of regasified LNG will exceed 30,000 rubles. for 1 thousand cubic meters. Thus, the inter-tariff difference with a supply volume of 0.5 billion cubic meters can be about 11 billion rubles. in year.

NOVATEK partially took over the creation of the LNG receiving infrastructure near Petropavlovsk-Kamchatsky. The company will build the offshore part of the LNG receiving complex in Rakovaya Bay, Avacha Bay (floating regasification unit, berthing facilities and gas carriers) during the second or third quarters of 2025. This is due to the fact that the company is still building its own terminal in Kamchatka for transshipment of LNG produced in the Arctic from Arctic gas carriers to conventional ships.

The budget will invest 12 billion rubles in the creation of a reception infrastructure, it should be introduced in the first quarter of 2025. In the future, it is assumed that the constructed coastal infrastructure facilities will be transferred to Gazprom under a concession agreement.

Igor Yushkov, an expert at the Financial University under the Government of the Russian Federation, notes that providing gas to Kamchatka is a project that will always generate losses, so it is logical that the government returned to the original version of providing the region with raw materials through Gazprom. In his opinion, Gazprom will continue to insist on compensation for its losses from gas supplies to Kamchatka, and perhaps they will be partially subsidized. At the same time, Igor Yushkov notes that NOVATEK may still take part in the gasification of the region, since it plans to develop large-scale LNG transshipment in Kamchatka.

Olga Mordyushenko