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Gazprom Sells More Third-Party Gas via Dutch Hub

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Russian gas giant Gazprom is doing a lot more of its trading via the Title Transfer Facility (TTF) hub in the Netherlands and a lot less through the UK's National Balancing Point (NBP) hub. The TTF is Europe's most liquid natural gas trading hub and has become the de facto pricing benchmark for the global LNG market (LNGI Jul.13'20). Global gas and LNG traders use the TTF as the go-to hub for forward physical and exchange-based futures trading in order to hedge the risk of their global portfolios. The Dutch hub's top-dog status was confirmed by recently released data from Gazprom, the world's biggest gas production company. Reselling Third-Party Gas Ahead of its annual shareholder meeting on Friday, Gazprom reported sales of 48.1 billion cubic meters of gas in the Netherlands in 2020, up from 16.3 Bcm in 2019. But that is a composite total, which includes exports of Russian gas to the Netherlands, which amounted to 11.8 Bcm, and more than 35 Bcm of non-Russian gas that was bought and resold by Gazprom's European trading and distribution units. Gazprom's sales figures for the Netherlands may also include the 800,000 tons of LNG -- equivalent to 1.2 Bcm of gas -- that Gazprom delivered to the port of Rotterdam last year under a contract with OMV. The surge in Gazprom's reported sales of non-Russian gas in the Netherlands can be attributed to its increased trading activity at the TTF hub, according to a market expert and a source close to the company. Additional Source of Revenue Trading third-party gas in Europe allows Gazprom to generate extra revenue on top of the money it earns from its pipeline exports of Russian gas to the region (LNGI Jun.17'21). In recent years the company has shifted most of its European gas trading activity away from the UK's NBP, which was previously Europe's largest gas hub. Gazprom's total sales of gas in the UK fell to 8.9 Bcm in 2020 from 59 Bcm in 2019, mostly because of a sharp fall in sales of non-Russian gas. Its exports of Russian gas to the UK fell to 6 Bcm in 2020 from around 10 Bcm in 2019. Data from the London Energy Brokers Association shows the TTF traded some 27,000 terawatt hours (equivalent to 2.57 trillion cubic meters) in the over-the-counter market last year, compared to just under 4,000 TWh for the NBP. The Brexit Effect The UK's departure from the EU, known as Brexit, is likely to have played a role in the decline of the NBP. Brexit did not place any new obstacles in the way of gas supplies between the EU and the UK, but some companies have relocated trading staff to continental Europe as they prepare for a post-Brexit world (IOD Dec.29'20). The annual volumes traded on the Dutch hub are almost 20 times the Netherlands' annual consumption of gas. Meanwhile, Germany remains Gazprom's biggest market for pipeline exports of Russian gas, receiving some 45.8 Bcm last year, which was down 14% from 2019. Gazprom also conducts some spot sales of Russian gas via the TTF hub and its Electronic Sales Platform (ESP). Total ESP sales rose nearly 80% last year to 27.1 Bcm, including some gas to be delivered in 2021-22. Germany accounted for 39% of all ESP sales, followed by Austria (21%) and Slovakia (20%) (LNGI Nov.16'20). Vitaly Sokolov, Moscow, and Jaime Concha, Copenhagen

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Gas Demand, Gas Supply, Gas Prices, Corporate Strategy
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