The Russian government is required to determine the upper limit of natural gas and condensate prices within 10 days, as well as service fees related to production.

Source: Kremlin.ru

Moscow, December 22nd. V. President of the Russian Federation Putin signed a decree prohibiting Gazprom and its institutions from purchasing natural gas and condensate produced by a joint project with Wintershall DEA and OMV in the Yamalo Nenets Autonomous Okrug, at prices higher than regulatory prices.

Decree of the President of the Russian Federation on December 22, 2022 No. 943 has been announced on the official legal information portal website.

New laws and regulations

According to the law, until October 1, 2023. Prohibit Gazprom and its subsidiaries from fulfilling their obligations towards foreigners associated with unfriendly countries:

If the promised amount is calculated based on the price of these hydrocarbons exceeding the limit, then at the time of payment:

Natural gas extracted underground from natural gas fields in southern Russia,

Natural gas and condensate from the underground section of the Achimov sediment in the Urengoy Oil and Gas Condensate Field (NGCM);

Payment for natural gas and condensate extraction related services on the Urengoy NGCM Achimov deposit, if the cost of such services exceeds the upper limit.

The amount of fulfilling obligations shall not exceed the price and service fee limits set by the Russian Federation government.

Obligations exceeding these amounts shall be deemed fulfilled in accordance with the Presidential Decree of the Russian Federation.

This clause aims to protect Gazprom from potential lawsuits from foreign partners.

During the review of the dispute between Gazprom and Gazum, a Finnish gas company, the Stockholm Arbitration Tribunal deemed the Russian President's "natural gas for rubles" decree to be force majeure.

The decree also explains some issues related to the ban:

This prohibition applies to obligations towards Russian legal entities whose shares (including preferred shares) or shares in legal capital belong to foreigners from unfriendly countries,

This prohibition applies to obligations that expire after March 1, 2022,

This prohibition does not apply to obligations for transactions conducted in organized auctions.

This law shall come into effect from the date of its official promulgation.

The government of the Russian Federation is required to determine the upper limit within 10 days:

The prices of natural gas and condensate,

Service fees related to natural gas and condensate production.

The Ministry of Finance of the Russian Federation has the authority to provide formal explanations on the implementation of laws and regulations.

South Russia

It is located in the Krasnodar region.

Inventory (ABC1+C2 category):

More than 1 trillion cubic meters of natural gas,

More than 50 million tons of oil and natural gas condensate,

About 85% of the reserves are concentrated in the Cenoman deposit and the Toulon formation, while the remaining 15% are concentrated in the lower strata and the Archimov deposit;

The oil field is the main resource base for the natural gas pipeline of Beixi No.1 trunk line.

2009 The annual natural gas production of the oilfield is 25 billion cubic meters.

Maintain this level since 2011. The difficult to extract reserves (TRIZ) of the Tulun deposit are currently being developed.

The operator is Severneftegazprom, and its shareholders are Gazprom (40%), Wintershall DEA (35%), and OMV (25%).

In addition to Severnneftegazprom distributing all its profits proportionally to shareholders, the financial model of the oilfield development also includes two traders: Gazprom Jurgm Trading and Gazprom Jurgm Development.

Wintershall DEA and OMV respectively hold 1 preferred share of Gazprom Jurgm Trading and Gazprom Jurgm Development.

These preferred shares entitle foreign shareholders to a dividend of 99.99% of the company's net profit.

The net profit comes from purchasing natural gas from Severnefneftegazprom and reselling it to Gazprom at a premium.

Achimov Urengoy NGCM sedimentary area Urengoy NGCM is located in Yanao Purov District;

It is one of the largest gas fields in the world, second only to the North/South Pars oil fields (Qatar/Iran):

The estimated recoverable natural gas reserves are as high as 10 trillion cubic meters;

For the convenience of development, it is divided into underground parts, including Gazprom and foreign partners working in three underground parts;

Archimov sedimentation:

Urengoy NGKM underground section 1A:

A joint venture between development project operators Acimgas, Gazprom, and Wintershall Dea,

Production began in 2008,

Project level of natural gas production reaching 10 billion cubic meters per year - October 2019

Akimov deposit 4A and 5A underground layer%

Operator: Acim Development (Gazprom 74.99%, Wintershall DEA 25.01%)

General contractor for underground development - Achimgaz,

Starting production of natural gas and condensate in Zone 4A - January 2021, Zone 5A - April 2021

Total natural gas production from 2027 to 2030 The annual natural gas production is approximately 15.5 billion cubic meters,

OMV had considered entering the project with a 24.98% stake, but its initial asset exchange plan with Gazprom was blocked.