MOSCOW (Bloomberg) –Russian gas giant Gazprom PJSC missed its own “conservative” target for 2021 exports to Europe, and those capped flows contributed to the continent’s worst energy supply crunch in decades.
Gazprom delivered 185.1 billion cubic meters to its main clients abroad, including Turkey, China and Europe, excluding the former Soviet Union nations, Chief Executive Officer Alexey Miller said in a statement on Sunday. That’s 3.2% above 2020 levels, but lower than 2018 and 2019, which were around 200 billion cubic meters.
Deliveries to Europe and Turkey were about 177 billion cubic meters last year, according to calculations by Bloomberg News and BCS Global Markets based on Gazprom’s data. That fell short of Gazprom’s forecast for exports to Europe and Turkey of as much as 183 billion cubic meters — an estimate it stuck to since the spring and maintained at the end of October, even as Europe clamored for more supplies.
Capped Flows
While Gazprom’s flows to Europe and Turkey were seen below Gazprom’s outlook, they were in line with recent estimates from BCS Global Markets, said Ron Smith, the company’s senior oil and gas analyst in Moscow. “It was clear in recent weeks that high prices had caused a reduction in nominations from its European customer base,” he said.
Flows to Europe and Turkey could be even lower — at some 175.4 billion cubic meters last year, based on assumption that Gazprom’s daily flows to China were more than a third above its contractual volumes in November and December, according to Mitch Jennings, an energy analyst at Sova Capital.
Gazprom’s exports have been closely scrutinized as tight supplies in Europe recently sent prices soaring to records. With winter setting in and the region’s stockpiles dangerously low, the Russian company has been sending only as much gas to EU clients as it’s obliged to under long-term contracts, and for months hasn’t offered spot cargoes going into early 2022.
It’s unclear why Gazprom has been reluctant to offer spot gas to Europe. While the company has pointed to demand destruction as a result of surging regional prices, European officials say the Russian producer is intentionally withholding in hopes of speeding up approvals for the contentious Nord Stream 2 pipeline.
Gazprom doesn’t break export data down by country, making it difficult to estimate 2021 flows to individual markets. However, Miller said that the largest growth in deliveries was to Germany, Turkey and Italy. Flows to China exceeded Gazprom’s contractual obligations throughout 2021, according to Miller.
Daily exports outside ex-USSR nations in December, when the peak demand season often starts, averaged 439 million cubic meters — the lowest level for that month since 2014, according to Bloomberg calculations.
Gazprom’s gas output for 2021 reached 514.8 billion cubic meters, the highest since 2008. December daily production averaged 1.523 billion cubic meters, the highest since 2013 for that month.
With Russian pipeline exports to most EU countries capped in December, the bulk of the extra gas stayed at home as abnormally low temperatures set in over the final days of the year.
As temperatures plunged, deliveries to domestic clients in late December surged to as high as 1.656 billion cubic meters a day, Gazprom said, higher than its average daily production levels for December. To meet the demand, the company said withdrawals from local underground storage reached a five-year high.
Russia can afford to draw record amounts from its inventories as Gazprom filled the domestic sites with all-time high gas volumes of 72.6 billion cubic meters by November.
Source: www.worldoil.com
Author: Olga Tanas and Dina Khrennikova