Gazprom's August Exports Lag Year-Ago Level

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Gazprom's monthly pipeline gas exports fell below year-ago levels in August for the first time this year, amid talk that it has been deliberately squeezing supply to Europe, its main export market. The Russian gas giant exported around 16 billion cubic meters to Europe and China last month, down about 2.4% versus the same month of last year, Energy Intelligence calculates. However, August exports were 3.9% higher than in July. Although export volumes in all previous months of this year exceeded the low levels seen in the corresponding months of 2020, industry insiders suspect Gazprom may have been deliberately restricting supplies to Europe to keep spot prices high and to maximize revenue. Politics may also have played a role, with Gazprom apparently choosing to put the brakes on volumes exported via the Ukraine transit route (IOD Aug.10'21). In January-August, Gazprom exported 131.3 Bcm to Europe (including Turkey) and China, up 19.4% versus the same period of last year, Gazprom said on Wednesday. But Gazprom is standing by its conservative full-year forecast for exports to Europe of 183 Bcm, up by just 7 Bcm from 2020 (IOD Aug.31'21). Exports to China are expected to rise to as much as 10 Bcm this year from 4.1 Bcm in 2020. Restricted Supply The strong growth in volumes for the first eight months of this year mainly reflects a recovery from low volumes in the first half of 2020 (see graph). In late July of this year Gazprom slashed daily gas flows via the Yamal-Europe export pipeline by some 40%. Yamal-Europe flows fell even further for more than two weeks after a fire at the Urengoi gas condensate treatment plant (IOD Aug.24'21). Gazprom partly offset the reduction in Yamal-Europe volumes by withdrawing gas from European storage facilities, but that added to the upward pressure on European spot prices which had already hit record levels. Gazprom stopped storage withdrawals on Aug. 23, but did not resume injections into all of its European storage facilities. Its GSA subsidiary has not yet restarted injection into the Haidach storage facility in Austria and its Astora subsidiary has not yet resumed injection into the Rehden storage in Germany. Rehden, Gazprom's largest affiliated storage facility in Europe, remained only 4.37% full as of Aug. 30, down from 9.42% before the fire and 83.7% a year ago. Production Grows Despite Fire The Urengoi fire did not have a significant impact on Gazprom's gas production. In fact August production of 39 Bcm was up 4.3% from July and up 14% from August 2020, Energy Intelligence calculates. January-August production totaled 337.2 Bcm, up 17.9% on the same period of last year, Gazprom said. The fire did affect two de-ethanization units at Urengoi, one of which was completely destroyed and will only be replaced by a new one by the end of 2022, according to Gazprom gas processing executive Andrei Skrepnyuk. The other de-ethanization unit will start operations again in the next few days, he added. Vitaly Sokolov, Moscow

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