Fire at Novy Urengoy plant caused gas prices to rise on global markets MOSCOW: Gazprom is gradually resuming supply of feedstock to the gas condensate plant in Novy Urengoy after a fire broke out last Thursday at a condensate preparation plant, Interfax has said, citing a press release from the Russian energy giant. The plant is part of the Urengoy gas production complex that processes unstable gas condensate from the largest fields in the Nadym-Pur-Taz region, Russia’s main gas province. The process of stabilizing the condensate produced together with natural gas is linked inseparably with gas production, meaning that the fire caused the Novy Urengoy plant to completely stop accepting raw materials. It led to a decrease in Gazprom’s gas production by tens of millions of cubic meters per day, according to Interfax. The accident has caused concerns over the effect it might have on Gazprom gas supplies via the Yamal-Europe pipeline, sending natural gas prices above $540 per thousand cubic meters at trading (Dutch TTF) in Europe on Aug. 6. The capacity of the Yamal-Europe pipeline is 33 billion cubic meters a year, which works out to about 16 percent of Gazproms’s 2021 total gas supplies to EU, which were estimated at 202 billion cubic meters, according to Kirill Bakhtin, an oil and gas analyst at Moscow-based Sinara Financial Group. Physical transit via the Yamal-Europe gas pipeline decreased by a further 3 percent on Sunday, dropping from 1.5 million cubic meters per hour to 1.4 million cubic meters her hour, Interfax said on Aug. 9, citing data provided by German transport network operator Gascade. Analysts are cautious in their opinions regarding the extent of possible impact on Gazprom gas supplies to Europe, and are waiting for further details from the company about the damage caused by the fire. “We understand most of the short-term impact will be on gas condensate output,” analysts at Renaissance Capital wrote in a note published Aug. 6. “In this scenario, we estimate Gazprom may lose an annualized production volume of about 5 millions tonnes of gas condensate (reflecting 29 percent of our 2021 estimate), and about 8 billion cubic meters of natural gas (2 percent of our estimated 2021 gas output and 4 percent of our 2021 gas export volumes estimate).” In a note published on the same day, Goldman Sachs analysts said: “We think that the implications are not material given that the gas production volumes that might be lost as a result of the accident can be compensated by higher production at other fields and Russian gas in storage. Hence, we believe that gas sales volumes would be largely unaffected by this accident.” In what seems to be a similar approach, Bakhtin of Sinara Financial Group said in an Aug. 9 note: “We think that Gazprom’s gas exports from Yamal were reduced as a temporary precaution and will be restored shortly, since the fire allegedly damaged the de-ethanization facility used for the preparation of gas condensate. The main question now is how the accident will affect Gazprom’s gas condensate production chain. Without any comments from the company on the actual damage caused by the fire, it is not possible to accurately estimate the timing of the resumption of liquid and gas supplies in full.”