Why is Gazprom (LON: OGZD) buzzing?

Summary

  • Gas company PJSC Gazprom’s Nord Stream 2 pipeline project is expected to be completed by August and is currently 98% complete.
  • The completion of the Nord Stream 2 pipeline will lead Gazprom to increase its natural gas exports to the EU.

LSE listed and Russian state-controlled energy company PJSC Gazprom (LON: OGZD) was trending over the weekend after news emerged that the Nord Stream 2 pipeline project, of which Gazprom has a controlling shareholding, will be completed by the end of August.

Gazprom’s (LON: OGZD) share price performance

Gazprom’s shares closed at USD 7.90, up by 1.79 per cent on 9 July. While the FTSE IOB index, which it is a part of, ended at 910.37, down by 0.61 per cent.

(Image Source: Refintiv)

Gazprom’s market cap stood at £67.597 billion, while its year to date return stands at 41.07 per cent.

Also Read: 5 hot FTSE oil and gas stocks in focus as oil prices dip

Gazprom’s (LON: OGZD) Nord Stream 2 project

The Nord Stream 2 is the pipeline project of Swiss based and Gazprom owned project company Nord Stream 2 AG. The construction of the 1,230-kilometer pipeline is aimed at boosting natural gas exports from Russia to Europe and will run across the bottom of the Baltic sea, thereby bypassing transit countries. Some of the transit nations include Ukraine, Belarus, and other countries.

Matthias Warnig, Nord Stream 2 AG’s managing director, said the project was about 98 per cent completed at present and is expected to be completed by end of August.

However, Mr. Warnig added that Gazprom will continue natural gas exports to the EU via transit state Ukraine even after 2024. 

Gazprom has a controlling shareholding of the venture, at 51 per cent. Other key investors in the pipeline project include oil and gas giant Royal Dutch Shell (LON: RDSA), OMV, Engie, and Uniper.

The Nord Stream 2 pipeline is of major importance for Europe, due to it being one of the few channels of gas supply to the continent. Nord Stream 2 is the second pipeline, the first pipeline has been operational since 2011.

Upon completion, Gazprom is expected to increase its total natural gas exports to Europe to 280 billion cubic meters (bcm) per year, up from 219 bcm exported to Europe in 2020.

There are some concerns as well, the Nord Stream 2 pipeline will lead to the EU becoming more dependent on Russia to meet its energy demand. The additional pipeline is expected to account for up to 59.5 per cent of Europe’s natural gas demand.

Moreover, there are some concerns that there could be insufficient gas deliveries over the coming winter to the EU, and that Russia may be exerting political pressure to complete the Nord Stream 2 construction due to Gazprom’s not booking more gas transit via Ukraine during July, despite its reservoirs being unusually low.

The Yamal pipeline was down for scheduled maintenance last week, while the existing Nord Stream pipeline is expected to be down from 13 July to 23 July for maintenance as well.

Also Read: How FTSE Oil Majors Reacted to Brent Crude’s Two-Year High Mark

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