At the end of 2017, three years after having annexed crimea and made the battle of the separatists of the Donbas, Vladimir Putin traveled to the Siberian port of Sabetta to fire the first methane tanker of the recently opened terminal of Yamal LNGone of the largest plants in gas production and liquefaction of the world. “It’s a great day for us,” the Russian president said jubilantly. It was not be for lowerly. After many doubts about its viability, the project had overcome the inhospitable arctic conditions and the sanctions imposed by the United States. Both the deadlines and the planned budget had been met. Putin’s dream to also compete with the big ones world exporters of liquefied natural gas (LNG) was a bit closer.
The Jamal’s origins are important because more than 90% of the Liquid gas that European Union continues to import from Russia, as well as the totality that arrives in Spain. A trade without Brussels sanctions and therefore totally legal. naturgy have a current contract with Yamal until 2041, while the Spanish subsidiaries of Met, Dxt and Enetthe Swiss traders They have also imported Russian gas to the Peninsula since the start of the invasion of Ukraine, they bought it for cash in the spot markets or through third-party companies, as derived from the data of the Kpler consultancy obtained by EL PERIÓDICO. Part of that money has ended up indirectly in the kremlin coffers and has served to nourish the pockets of oligarchs at the helm of Novatekthe Russian company that controls the majority shareholding of Yamalwith 50.1%.
Novatek is the key piece of this story, the Russia’s second largest gas produceronly surpassed by the state Gazprom. But unlike the latter or the oil company Rosneftis a private company and technically independent of the Kremlin, a condition that has long raised its appeal among foreign companies. It also helped that it is the private company with the third largest gas reserves in the world.
Distancing from Novatek
But Putin’s war and Ukrainian activism are changing that perception. Last December, the French energy company Total Energy, which controls 19.4% of Novatek’s shares and 20% of its Yamal project, announced several measures to gradually leaving Russia. It not only withdrew its members from the novatek advice but it happened to write off as loss all its assets in Putin’s country, according to ‘Le Monde’. At the moment, it will not sell its shares because Brussels has penalized to Novatek’s second largest shareholder, Gennady Timchenko. First, Leonid Mijelsonalso CEO of the company, has been sanctioned by the United Kingdom and Canada.
Ranked among the 10 largest fortunes in Russia, both are considered Putin’s close allies, who helped Yamal’s strategic project get off the ground. He Kremlin provided part of the funding in the form of subsidies, although it ended up being China the decisive actor, contributing through its state banks almost half of the 27,000 million dollars What did the project cost? In it Yamal Consortium also participate China National Petroleum Corporationwith 20% of the capital, and the Chinese sovereign fund Silk Road Fundwith 9.9%.
Moscow’s aid did not end there, which it granted to Yamal -the producer of the entire Russian gas imported into Spain— generous tax breaks which are not enjoyed by other hydrocarbon producers, which has created tensions among industry leaders. “The Straits social and business ties between the owners of Novatek and the Kremlin are the main reason for its privileged position in the Russian energy sector,” the Warsaw-based Center for Eastern Studies wrote in 2018.
Yamal LNG taxes
During the first 12 years from the start-up of its operations, Yamal will not pay iexport taxes nor of mineral extraction. And for your income a tax is applied “preferential tranche” of 13.5%. What does not mean that it is not contributing to the Russian Treasuryfrom which the funds to finance the war in Ukraine. Last year Yamal paid a 20% for your benefitswhich amounted to 7,733 million euros at the current exchange rate. An amount to which he had to add additional 456 million after the Kremlin modified the criteria on the exchange rate, according to what the economic newspaper ‘Kommersant’ published in April.
And this year the tax burden to the benefits derived from the LNG export will increase up to 3. 4%, a measure with which the Kremlin intends to compensate the increase in fiscal deficit caused by the war expense and the fall in income from the export of hydrocarbons. “The Spanish imports are generating revenue for the Russian state through the taxes paid by Yamal and Novatekalthough it is less than what it receives for the gas exported by tube”, says Anne-Sophie Corbeau from the Center on Global Energy Policy. Since the invasion began, Spanish importers have spent almost €3.5 billion in the purchase of Russian gas, according to estimates by the Center for Research on Energy and Clean Air (CREA).
Income that is also feeding the multi-million dollar accounts of the large shareholders of Novatek. “All that money makes it less likely that the oligarchs in charge of the company will end up speaking or positioning themselves against Putin,” he says. Anna Mikulskaan analyst at the Houston-based Baker Institute.
The Repsol contract
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Of the Spanish companies, not only Naturgy has a long-term contract with the Timchenko and Míjelson gas company. Three years before the start of the war, Repsol signed a 15-year contract with Novatek to import liquefied gas from Arctic LNG 2 –a plant still under construction– and other company projects. This was published by Novatek and it was reproduced by numerous Spanish media. But in response to questions from EL PERIÓDICO, the Spanish energy company maintains that it neither has contracts linked to Russian assets nor is it importing Russian LNG in the ‘spot’ modality for immediate purchase, information that coincides with this newspaper’s investigation.
“As for the contract with Novatek, signed before the invasion, the gas does not come from the Arctic and has not come from any other Russian assets. In fact, in the last year the shipments of the contract with Novatek come from the US“, says the Repsol spokeswoman, María del Carmen Sáez.