Page 123 - RusRPTFeb21

9.2 ​Major corporate news 9.2.1​ Oil & gas corporate news
● Gazprom
Gazprom​’s market share in European gas consumption fell to 33% in 2020​, down 3pp y/y, ​Kommersant​ reports. Gazprom’s exports to Europe and Turkey amounted to some 175bcm, according to management.
In 2020, Gazprom reduced the volumes of transit through Ukraine to 55.6bcm (down 38% y/y), the lowest level in the last 30 years, ​Vedomosti​ writes.
Gazprom’s export volumes to Europe and Turkey in 2020 came slightly above our forecast of 172bcm. The loss of market share in Europe last year happened to a large extent in 1H20, when low spot prices made LNG more attractive than deliveries under Gazprom’s oil-linked contracts; this was expected and has long been factored in by the market. We note that Gazprom’s oil-linked prices are likely to be lower than spot prices at the beginning of 2021, if the price levels on the spot gas markets continue to be elevated. This might support Gazprom’s exports in 1Q21, together with the cold winter. We forecast 192bcm of exports to Europe and Turkey in 2021F (or close to the level reached in 2019).
Gazprom’s transit through Ukraine in 2020 was below the take-or-pay volumes of 65bcm under the transit agreement. In 2021, the take-or-pay threshold is lower, at 40bcm. We note that the Ukrainian route might be more expensive for Gazprom than Nord Stream or TurkStream (at $2.66/kcm/100km, according to Vedomosti,​ that means more than $30/kcm for Ukraine and some $20/kcm for Nord Stream).
Gazprom​ has reported its January gas export and production volumes. A January-record 19.4 bcm of natural gas was exported to Europe and China, up 45.4% y/y​. The export flow to China was 2.5% above contractual obligations and up 190% y/y. Gazprom gave a preliminary estimate of gas production in January of 47 bcm, which would be up 6.4% y/y. Strong operating results had already been expected for January-February, taking into account the cold weather and strong demand in both Asia and Europe. The impressive y/y export growth was driven mainly by a low-base effect (last January saw demand drop on warm weather and storage in Europe being full because of Ukraine transit uncertainties). Still, Gazprom exports in January this year exceeded those in January 2017-19 by 3-11%. This was partially driven by a ramp-up in gas deliveries to China based on contractual obligations. The January gas deliveries to Europe were 5-8% higher than in
123 ​RUSSIA Country Report​ February 2021 www.intellinews.com