Oil Daily | Russia Strengthens Gas Ties with China, Faces EU LNG Sanctions Impact on Export Model

【Oil-Producing Countries Dynamics】

Turkey is aiming to participate in the reconstruction of Syria's oil and gas sector. Efforts include helping with electricity supply and studying projects for reconstruction using crude oil and natural gas. Plans are underway for pipelines between Syria and Turkey, amid Syria's struggles under U.S. sanctions and lost Iranian and Iraqi oil supplies.

Russia's natural gas exports to China have surpassed expectations, with the Power of Siberia pipeline exceeding its contract volume. Russia aims to strengthen its role as China's main gas supplier, yet China continues diversifying its energy sources. Gazprom's rapid delivery acceleration signifies a strategic pivot towards China, though broader geopolitical implications remain.

Russia's LPG prices halved after EU sanctions took effect in December. Proposed EU sanctions on LNG could impact Russia's export model, requiring infrastructure changes. Russia faces increasing pressure from sanctions, affecting revenues from oil exports. The restriction on European re-export of Russian LNG aims to hinder Russia's war financing.

Iraq plans to eliminate gas flaring by 2027, aiming to capture more associated gas for power generation. Efforts include initiatives and deals to reduce flaring, such as a major agreement with TotalEnergies. Iraq imports natural gas despite being a top oil producer, seeking energy security and reduced emissions.

Krasnodar declared a regional emergency following oil spills from tankers in the Black Sea. The damaged vessels, over 50 years old, are seen as environmental risks, exacerbated by Western sanctions. Oil continued washing ashore, contrary to initial expectations of containment, with warnings of potential future disasters.

【Latest Oil Policies】

Russia and Ukraine's gas transit deal may not be renewed, potentially disrupting European gas supplies. Russian President Putin blames Ukraine for delays. Without a new agreement, countries like Austria and Slovakia could face difficulties. Russia is eager to bypass Ukraine but faces legal constraints. The EU has discussed alternatives with Ukraine.

【Industry News】

India's oil demand growth is set to surpass China's for the first time in 2024. India's demand is expected to increase significantly, contrasting with China's economic slowdown and booming EV sector. India's continued reliance on coal and slower clean energy transition are factors in this shift in demand dynamics.

India plans significant coal capacity additions by 2032, maintaining high coal usage amid growing power demand and renewable capacity. Despite surging coal demand and global record levels, India balances energy needs with environmental concerns, as seen in their efforts to prevent blackouts during extreme weather.

【Company News】

Gazprom has exceeded its natural gas delivery targets to China through the Power of Siberia pipeline, highlighting Russia's strategic energy pivot. The pipeline achievements align with Russia's goal to become China's top gas supplier, countering European market losses. Mongolia's exclusion of Power of Siberia 2 reflects China’s diversification efforts.

【Others】

Finland and Estonia are investigating subsea cable damage potentially caused by a Russian tanker. The incident underscores concerns about maritime security and infrastructure vulnerability. Investigations are ongoing, and international cooperation is sought to address systematic attacks on critical infrastructure, highlighting risks posed by Russia's shadow fleet.

China's EV sales are projected to surpass traditional cars by 2025, driven by strong growth in new energy vehicles. This shift impacts oil demand in China, the world's top crude importer, and aligns with broader economic and environmental trends, challenging traditional automotive markets and affecting global energy dynamics.