Russia's LNG Production Falls

Russia’s LNG production decreased 5.9% on the year to 7.8 million metric tons in the first quarter of 2021, the federal state statistics service said Thursday. It was an inauspicious start for a country aiming for exports of 140 million tons per year by 2035 (LNGI Mar.22'21). The first-quarter drop can likely be traced to Sakhalin. This past March, Russia produced 2.4 million tons, down 13.9% on the year, the statistics service said. The drop is understood to be mainly due to an unplanned maintenance at one of the country’s two large LNG plants, Gazprom’s Sakhalin-2, which halted around half of the facility’s production capacity for almost an entire month (LNGI Mar.29'21). However, LNG production, almost entirely exported, did not drop last year despite the market oversupply and low spot prices, but on the contrary hit a record 30.5 million ton level, according to the statistics service (LNGI Jan.25'21). The LNG production decline was in contrast with the growth in Russia’s natural gas production, which was caused by a sharp increase in pipeline gas exports and domestic sales after a significant drop a year ago. Russia’s natural gas production, excluding associated gas produced by oil companies, increased 8.4% on the year to 174 billion cubic meters in the first quarter of 2021, including 58.8 Bcm in March, up 15.1% on the year. Russian pipeline gas exports to Europe and China were among key factors behind gas production growth in the first quarter (LNGI Apr.6'21). The growth in exports continued in the first half of April, as demand remained high after the cold winter and high spot prices helped Gazprom compete with LNG imports. In the first 15 days of April, Gazprom, Russia’s sole pipeline gas exporter, supplied 7.8 Bcm to Europe and China, up some 15% on the year, Energy Intelligence calculates, based on Gazprom’s data. The growth was not affected significantly by unplanned maintenance on the Yamal-Europe gas pipeline caused by technical issues at the German entry point. The flows via the pipeline were fully restored on Wednesday (LNGI Apr.14'21). The demand was supported by the still quite cold weather, which kept European gas storage depleted in the beginning of April, Gazprom said. From Mar. 26 to Apr. 12, European buyers injected 2.9 Bcm into storage, but withdrew almost as much, 2.8 Bcm, in the same period, which left storage less than 30% full, it added. Since the beginning of the year, Gazprom has exported 60.5 Bcm as of April 15, up 28.4% from the same period of last year, the company said in a statement Thursday. Exports to Turkey, where Gazprom particularly faced an increased competition from LNG last year, increased by 116.5% on the year in the first 3½ months of 2021, the state-run exporter said, without providing an absolute figure. Exports to Germany increased 34.5% on the year, Poland 19.6%, Serbia 82.7%, Romania 115.5% and Greece 27.7%, Gazprom said without elaborating. Supplies to China continued to grow as well, Gazprom said, without providing details. Vitaly Sokolov, Moscow