October 19, 2016, 23:26 / Business

Gazprom sets a historical record

On Tuesday, the company transferred 578.9 million cubic meters to Europe. m. Low prices and cold weather helped Alena Makhneva Alina Fadeeva

Gazprom set an absolute daily record for gas sales to Europe thanks to low prices and cold weather / M. Stulov / Vedomosti

“Winter has not yet begun, and the demand for Russian gas in non-CIS countries is as if there were severe frosts in Europe,” said Gazprom Chairman of the Board Alexey Miller. On Tuesday, the concern set a new absolute daily record for gas supplies to non-CIS countries in its entire history – 578.9 million cubic meters. m, the company reported. “This is yet another proof that Russian gas is highly competitive and in great demand on the European market. That new gas transportation routes for its reliable supply - Nord Stream 2 and Turkish Stream - are needed by foreign consumers,” Miller believes.

Russian gas remains in demand, in particular, due to its price. The minimum prices for Russian gas were in the summer – $150–155 per 1000 cubic meters. m, now – about $165 per 1000 cubic meters. m, Deputy Director of the National Energy Security Fund Alexey Grivach knows. But even with an increase in price, Russian fuel remains cheaper than gas on spot markets. A sudden cold snap in Europe, a decrease in LNG supplies and an increase in consumption by gas generation supported the rise in prices at hubs in October, analysts at Interfax Global Gas Analytics (GGA) note. Since the beginning of October, the price of NBP for next day delivery has risen by 31%, exceeding 2015 levels for the first time this year for the same period, GGA said. In the first two weeks of October, Gazprom increased gas supplies to non-CIS countries by 16% or 1.1 billion cubic meters. m, compared to the same period in 2015.

“In nine and a half months of 2016, we have already ensured an increase in gas supplies to non-CIS countries equal to the growth for the entire 2015,” Miller said. Since the beginning of the year, the growth in supplies to Germany has reached 7%, France – 21.1%, Austria – 24.8%, Greece – 53.7%, Holland – 92.5%, Denmark – 148.6%, the concern reported.

From mid to late October, as a rule, preparations for winter are completed - gas injection into underground gas storage facilities stops, recalls senior analyst at Vygon Consulting Maria Belova. “Perhaps someone is trying to catch the departing train and is increasing requests,” she suggests. “Further, gas prices may rise due to cold weather and rising oil prices.” In Europe, its own production is falling, and demand this year will increase by 2-3% compared to 2015, Grivach predicts. Algeria and Norway also increased supplies, and Holland limited production in Groningen, he adds.

Gazprom will make peace with Europe

Interfax GGA expects Russian gas exports to Europe to reach 16.6 billion cubic meters in October. m and will exceed last year's level by 14%, and in 10 months Europe will receive about 143 billion cubic meters. m of Russian gas. Gas consumption in Europe in the second half of 2016 may exceed last year's figures. Demand is supported by the growing energy sector in the UK and Germany, as well as gas generation in France, which partially replaces the decline in production at several nuclear power plants. Ukraine is unlikely to resume imports of Russian gas this winter, GGA analysts say. This means that the country will be completely dependent on reverse flow from Central and Eastern Europe.

The previous export record was on December 8, 2013 – 560.2 million cubic meters. m, writes Interfax with reference to data from the Central Dispatch Department of the Fuel and Energy Complex. Gazprom can set new records - the existing transport infrastructure allows this. “Ukrainian transit is used no more than half of the possible 120 billion cubic meters. m per year, Gazprom pumps about 60 billion cubic meters. m, the Nord Stream pipeline is not completely filled,” Belova points out. The European Union may allow increased pumping through the OPAL gas pipeline, Gazprom’s access to which is limited; there have already been precedents, Belova concludes.

Corrected version. The original published version can be viewed in the Vedomosti archive (smart version)