Gazprom Slashes Central Asian Purchases

Gazprom slashed gas purchase from Central Asia by 55% on the year to 10.4 Bcm in 2020, according to company data. It bought nothing at all from Uzbekistan, which it says cut exports amid growing domestic demand. The Russian state-run giant bought 9.2 Bcm from Central Asia for re-export to Europe last year, down from 20.2 Bcm in 2019 (table). The remaining volumes were resold in Central Asia, where Gazprom has buyers in Uzbekistan, southern Kazakhstan and Kyrgyzstan. Gazprom admitted last year it would consider cutting Central Asian gas purchases due to the steep drop in prices in Europe, which made re-exports unprofitable (NC May7'20). However, it managed to reduce the average purchase price in Central Asia by 45% on the year to $75.1 per thousand cubic meters in 2020, compared with the average export price in Europe at $134/Mcm, down 34% on the year. “Central Asian countries are now actively developing. This is primarily the case with Uzbekistan, and we see strong growth in consumption in that country,” Gazprom’s deputy CEO in charge of exports, Elena Burmistrova, said recently. “That is why purchase is decreasing to some extent since the government sends the gas for internal purposes, if we talk about Uzbekistan,” she added. Gazprom slashed gas purchases from Uzbekistan to zero in 2020 from 7.6 Bcm in 2019, of which 4.9 Bcm was re-exported to Europe and 2.7 Bcm supplied to southern Kazakhstan. Gazprom has a surplus of production capacity at home, but it buys gas from Central Asian countries, largely to help the Kremlin build political ties in the region and supply Russia's southern regions far from its own fields. Ukraine, which hasn’t bought gas directly from Russia since 2015, is reviving an idea to buy gas from Central Asia. For this, however, it needs Russia to transit the gas. In an interview with the Financial Times this week, the new CEO of Naftogaz Ukrainy, Yuri Vitrenko, said the company was prepared to take legal action against Gazprom to unblock pipeline gas supplies from Central Asia. Experts, however, doubt the chances of such a dispute. Gazprom Gas Purchases in Central Asia (Bcm) 2020 2019 %Chg. For Supplies to Europe* Kazakhstan 5.4 11.3 -52.2% Turkmenistan 3.8 4.0 -5.0 Uzbekistan 0.0 4.9 -100.0 Purchase Price†