Russia’s Rosneft delivers first LNG cargo to Egypt

Roman Kazmin

06-May-2016

Russia’s incumbent oil producer Rosneft delivered its first traded LNG cargo to Egypt on 29 April, according to a source familiar with the matter.

The cargo arrived aboard the 160,000 cubic metre (cbm) Golar Ice, which sourced the volumes from Ras Laffan in Qatar, ICIS shipping analytics platform LNG Edge showed. Switzerland-based energy trader Trafigura sold the cargo to Rosneft, the source said.

The delivery to EGAS was part of a supply deal that was facilitated through Ronseft’s Switzerland-based trading unit Rosneft Trading.

The deal was concluded after a supplementary confirmation agreement was signed following a memorandum of understanding for the purchase of 24 cargoes, the source said.

While media reports cited EGAS officials as saying that a confirmation deal for up to nine cargoes has been signed, a source in Russia said only one delivery has been confirmed so far.

There are two additional slots – one in November and one in December – that are being discussed, the source said.

The original agreement was signed last year on an intergovernmental basis, which meant state-owned companies such as EGAS can forgo a typically-required tender process (see LMD 7 July 2015).

The original term sheet indicated a crude oil-indexed pricing mechanism and broadly set the delivery volume at 24 cargoes.

However, since the credit conditions in Egypt have changed considerably since then, the final number of cargoes have been reduced.

As Rosneft has no structured offtake positions or LNG production of its own, it will likely rely on third-party suppliers to cover any outstanding positions in Egypt, should the other deliveries be confirmed.

One Switzerland-based source said it is very likely that Trafigura will supply Rosneft in other instances as well.

Besides developing two long-term LNG projects in Russia, Rosneft’s decision to enter the spot LNG market could mark a roadmap for entry into LNG trading.

It is unclear whether the company is currently negotiating to supply other geographies at this stage. roman.kazmin@icis.com

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