Page 113 - RusRPTMar21

are now fully oil-price linked), any forecast gas prices for Gazprom naturally have uncertainty, but it is undeniable the situation has improved for the company in just the last few weeks. Gazprom’s increasing optimism about European gas sales in 2021 are well-based, and likely to be followed by increasing Consensus estimates for earnings and dividends from 2021e.
Gazprom reported its 2020 exports yesterday, 15 February. Natural gas supplies to Turkey and Europe were at their lowest levels since 2015. Total exports to Western Europe, including Turkey, were down 8% YoY to 135.7bcm, while FSU exports were down 16% YoY to 30.7bcm. Deliveries in Russia were down 7% YoY to 247.6bcm. Deliveries to China via the Power of Siberia increased from 0.3bcm in 2019 to 4.1bcm in 2020.
Below are the dynamics for several key markets in 2020:
Germany: -8% YoY to 45.8bcm Italy: -14% YoY to 20.8bcm Netherlands: +39% YoY to 11.8bcm UK: -42% YoY to 6bcm
Turkey: +5% YoY to 16.4bcm
China: 4.1bcm in 2020 vs. 0.3bcm in 2019 Total Europe: -8.6 YoY to 174.6bcm
Total FSU: -16% YoY to 30.7bcm
Russia: -6.9% YoY to 274.6bcm
Expectations were for a rough year in terms of exports for Gazprom, as warm weather last winter and the renegotiation of the Ukraine transit contract at YE19 led to higher-than-expected storage levels in Europe. COVID-19 hurt demand more than expected. Turkey ended the year up 5% YoY; however, 2Q20 saw Gazprom export less than 1bcm, as the export price lag made pipeline gas much more expensive than LNG. Also, in anticipation of up to 8bcm in delivery contracts being renegotiated in 2020, Turkey could have elected to import less Russian gas. The pick-up in the Netherlands is notable, as the country’s sales of gas in Europe were down 26% YoY to 22.3bcm and its market share slipped from 5% to 4%. It is worth noting that the Netherlands’ key gas-producing field, Groningen, could cut production by half in October 2021, which is less than previously estimated, Montel reported last week. The field is expected to close in mid-2022.
Gazprom’s exports to the European market decreased from 35.5bcm to 32.4bcm, their lowest level since 2015, according to the company’s report. The US increased its market share from 3.3% to 4.8%, the largest gain YoY among those reported. Total US LNG exports dropped from 250bcf (7.1bcm) in
113 RUSSIA Country Report March 2021 www.intellinews.com