Page 112 - RusRPTMar21

significantly improved in just a few short weeks. Gas storage levels reveal why.Very cold weather settled over first NE Asia, then Central Europe, driving up gas demand, causing a temporary global LNG shortage. This in turn caused gas prices to rise not just on spot markets, but across the curve, as European gas storage was rapidly depleted. This time last year, storage was at 74bcm or c66% full, 10ppts above the 10-year average of 56% full in mid-February. It presaged a difficult 2020 – LNG battled pipe gas for storage, driving gas prices driven to historic lows of c$1/mcf (c$35/mcm). Situation began to right itself in December. The situation began to correct in December with severe cold in NE Asia and continued with cold air mass sitting over Central Europe for much of February. As of 14 Feb, storage had fallen to 42% full or to c48bcm, a c26bcm gap vs mid-February 2020. This was a much more attractive refill season, with higher y/y prices for full year. The gap could widen, as although Central Europe is coming out of its deep cold snap, storage draws are still at c1bcm/day.
Gazprom exports price forecast for 2021 raised to over $200/mcm. This is up from the $170/mcm budgeted only in December, Kommersant reported, quoting CFO Alexander Ivannikov. Optimism well-based; upside to consensus financial estimates. The increase stems directly from the LNG shortage that developed in December and January due to the abnormally cold weather seen in NE Asia. That shortage pulled all available LNG to Asia, raising prices in Europe and depleting European gas storage at record high rates. As we have pointed out in recent days, this has raised the outlook for Gazprom’s exports for the entire year of 2021, both in prices and volumes. With Gazprom’s European export prices now substantially tied to spot and futures prices (<20%
112 RUSSIA Country Report March 2021 www.intellinews.com