Gazprom Posts Gas Export Growth

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Russia’s pipeline gas exporter Gazprom increased gas supplies to Europe and China by a hefty 26% on the year to 99.9 billion cubic meters in the first half of this year, the company said Thursday, citing its own preliminary data. Gazprom enjoyed a set of favorable factors that helped it boost exports in its key market of Europe, where it has faced increasing competition from LNG over the past couple of years. Tables Have Turned Exports recovered after a 19% year-on-year drop in supplies to Europe, including Turkey, to 77.8 Bcm in the first half of 2020. The drop was due to a mild winter, ample stocks and the increased LNG supply, and was aggravated by record-low spot prices -- a situation described by Gazprom as a “perfect storm.” This year, the situation was the opposite. The winter was colder. Gas stocks were quickly depleted and empty storage continued to support demand and prices in the spring and even summer. LNG supply has been rather limited -- most cargoes were diverted to higher-priced Asian markets in the beginning of the year. The LNG supply remains restricted now by maintenance at import terminals. High spot prices are understood to additionally play into the hands of Gazprom, whose long-term contracts look more attractive than expensive spot LNG imports. Almost Record The first-half exports were close to a record of 101.2 Bcm posted in January-June 2018. The 2018 figure only included Europe, as Gazprom did not export pipeline gas to China before December 2019. The Russian giant might have exceeded the 2018 figure, but it tended to restrict its own supply in the first half of 2021 by refusing to book any significant volumes in extra transit capacity in Ukraine -- a tactic understood to be aimed at keeping prices high in Europe (LNGI Jun.29'21). Gazprom did not provide a full breakdown by countries, but said export supplies increased in Germany by 209.3%, Italy (14.1%), France (15.1%), Romania (264%), Poland (18.6%), Bulgaria (42.6%), Serbia (103%) and Greece (24%). Exports to China continued to grow, it said without elaborating. In January-June 2020, Gazprom exported 1.6 Bcm to China, but this year exports must be significantly higher, as supplies via the Power of Siberia gas export pipeline gradually ramp up according to schedule. The 38 Bcm/yr Power of Siberia contract is due to fully ramp up in 2025. In the first five months of 2021, Gazprom supplied 3.7 Bcm, according to Chinese customs data. Stocks Remain Low Gazprom is keenly watching injections into European storage, as the longer the stocks remain low the higher demand for imported gas will be in the fall, further supporting Russian pipeline gas exports. The situation now looks favorable to Gazprom, which points to the low pace of injections -- stocks remain 32 Bcm lower than a year ago. Of 66 Bcm withdrawn from storage this past winter, only 18 Bcm has been restored as of Jun. 29, Gazprom said, citing data from Gas Infrastructure Europe (GIE). European stocks were 47.2% full as of Jun. 29, compared with 80.24% on the same day last year, GIE data show. Vitaly Sokolov, Moscow

Gas Supply, Gas Pipelines
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