Rosneft Trading SA, a subsidiary of Russian state-owned Rosneft Group, delivered its first LNG cargo to the port of Ain Sukhna in Egypt, as part of a contract with Egyptian Natural Gas Holding Company, marking its first-ever LNG delivery.
The delivery of the cargo was made by the GOLAR ICE tanker to the Ain Sukhna port, in the Suez province, in accordance with an August 2015 agreement.
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The delivery is significant not only because it helps energy-starved Egypt, but also because it is the first ever LNG shipment made by Rosneft and heralds its official debut into this market.
Three years ago, Russian President Vladimir Putin passed a law paving the way for Rosneft and Novatek to export LNG. This, too, was a significant law as it took some authority away from Gazprom. In this move, Gazprom and its subsidiary Gazprom Export, lost the exclusive right to ship LNG abroad.
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Gazprom is not taking this sitting down and continues to protest the law, having found its position severely weakened, particularly with regard to its negotiating leverage over future LNG deals.
Gazprom will be further weakened by a pending marriage between Rosneft and China’s CNPC.
The news is even more interesting in light of the deleterious effects of economic sanctions against Russia. With oil prices hitting their lowest point in decades, LNG gives Russia some space to maneuver outside geopolitical constraints.
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This is exactly what Rosneft further highlights. “Transformational changes in the global LNG-trading market, consisting of rising volumes of spot deals, open extensive prospects for the growth potential of the Company’s trading arm. The combination of Rosneft group’s spot and long-term contracts will allow maximizing the economic efficiency of its deals whilst guaranteeing a stable LNG-marketing outlet”, it added.
Egypt is one of the top ranking countries in terms of gas consumption, currently relying on imports in order to meet its high energy demand. The contract between Rosneft and ENGHC stipulates five LNG shipments.
By James Burgess of Oilprice.com
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