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The Russian government is considering the possibility to allow Russia’s largest oil producer, Rosneft, to export natural gas to Europe via pipeline, the Kremlin said on Tuesday—a move that could ease the gas crunch in Europe, if approved.
Currently, only Gazprom has the right to export Russia’s natural gas via pipelines.
“Indeed, the issue is under consideration at the government,” Kremlin spokesman Dmitry Peskov said on Tuesday, as quoted by TASS, referring to the possibility that Rosneft could be allowed to also export natural gas to Europe.
The issue is “a work assignment” from President Vladimir Putin, Peskov said, but didn’t offer details on the government’s deliberations.
In August this year, reports emerged that Rosneft’s chief executive Igor Sechin had asked Putin Rosneft to be allowed to export natural gas with Gazprom acting as an export agent.
Such an agreement would not affect Gazprom’s monopoly in Russian exports, Sechin noted in a letter sent to Putin in August and seen by Russian business daily Kommersant.
Rosneft’s key argument for being allowed to export natural gas is that increased exports will raise the budget revenues for Russia at a time when gas prices in Europe are hitting records due to high demand and insufficient supply, including from Gazprom.
Amid the natural gas crunch in Europe with decade-low inventories for this time of the year, supply from Russia has been a key market mover in benchmark European gas prices in recent months.
Russia continues to abide by its obligations under its contracts with customers, but its gas giant Gazprom isn’t sending too much gas above those contractual volumes. Additional natural gas flows from Russia have not materialized yet, while the controversial Nord Stream 2 pipeline project is at least a few months away from commercial operations and is unlikely to help Europe’s gas storage levels this winter season.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.