Thread by @AmyJaffeenergy

Thanks to @AtlanticCouncil great questions from @JohnEdHerbst Re #russiaenergy Here’s some facts 🧵@AmyJaffeenergy shared: 1/ Russia is selling ~EXTRA 1.5 mbd to China & India. China up to 2mbd, from 1.6 mbd prior to war. ~30% discount price. China backed out Brazil, Saudi crude

https://twitter.com/ftenergy/status/1545455556667883522

🧵2/India Russian crude purchases went from zero to 1.1 mbd. Possible to buy additional 300kbd to 400kbd w price incentive. India now has imposed restrictions on re-exports to Europe of refined products to prevent domestic fuel shortages news.bloombergtax.com/daily-tax-repo…

🧵3/ @JohnEdHerbst asked if Russian oil &gas sector will be hurt by sanctions. Sakhalin 1 output to 10,000 bd (for local nat gas) down from 220,000bd reuters.com/business/energ…

🧵4/ but @energyintel reporting “[Russian] Production growth in June was mainly provided by Rosneft and its subsidiary Bashneft, which increased output by 415,000 b/d and 170,000 b/d, respectively, from the previous month.”

🧵5/ @energyintel also reporting more crude oil staying in Russia to replenish diesel stockpiles (war fuel?) Point is so far pain to Moscow oil sector has been low vs impact to Western consumers. Going forward Russian LNG will be most vulnerable to restrictions on maintenance

🧵6/Without Western service cos and spare parts Russia LNG could face problems. China’s Russian LNG imports up 50% from yr ago but also Chinese buyers lining up new LNG contracts elsewhere. China is major customer for Third Wave US LNG, largest by far after portfolio buyers.

🧵7/ China’s huge commitment to US LNG shows it is not locking down on energy relations w Moscow. Erica Downs speaking at @AtlanticCouncil notes diversification hallmark Chinese energy security approach

🧵8 big takeaway is on #oil Russian crisis hasn’t happened yet. Price reflects temporary dislocation shifting 1.5 mbd away from Euro spot market and Dhruzba to China, India. Risk is forward and likely geopolitical since no evidence of Rosneft upstream problems etc

🧵9/ US permitting and drilling on uptick, Biden admin/EU/Canada has options should Russia make war-motivated cut in oil exports. Nat gas is more immediate problem.

🧵10/ need to stop pretending “sanctions are working” and deal w here and now. ! Will US industry be able to build sufficient nat gas stockpile this summer to protect LNG exports to Europe from hurricane season? @ira_joseph

🧵 11/ If US not on track to build summer nat gas storage at high enough rate, @POTUS needs to look at options (US nat gas SPR like summer injections?) @ira_joseph what’s the solution?

🧵12/ Then there’s Cheniere pollution problem. Should @Cheniere be taking @sempra approach moving nearby residents out of harms way til geopolitics facilitates repair shutdown ? streetinsider.com/Politics/Exclu…

🧵13/ here’s resettlement details what @sempra did. Relevant to @Cheniere pollution waiver problem? @RichardMeyerDC @ira_joseph ? usatoday.com/story/news/nat…

🧵14/ upshot EU and Chinese reliance on US LNG not without its own set of risks that Biden admin must take seriously to prepare now for coming winter. Gas, more than oil, needs immediate strategic focus.

@Cristi_t_85 reminds 🧵15/ final ? From @JohnEdHerbst can Russia “shift” Euro pipe nat gas to China? Answer, no, not possible. Altai gas pipe (Power of Siberia 2) only “proposed” not built asianews.it/news-en/China-…

🧵16/ Yes, fact that Altai pipe not built means Russian pipe gas to Europe has to stay in ground if not purchased by European customers (includes Turkey).