Page 8 - Euroil Week 04 2020

EurOil PIPELINES & TRANSPORT EurOil
Gazprom’s gas sales to Europe set for 25% decline in Jan
RUSSIA
Gas storage inventories in Europe are at an all- time high.
RUSSIA’S piped gas supplies to Europe are slated to plunge to a five-year low this month, Interfax reported on January 24 citing transmission data, amid warm weather and record volumes of gas in storage.
Gas storage inventories in Europe are near an all-time high, after Russia’s gas pipeline monop- oly Gazprom and other European companies stocked up on supplies last year to safeguard against a potential halt to Russian gas transits via Ukraine on January 1, 2020. A disruption was ultimately avoided, as Gazprom was able to cut a new five-year transit deal with Ukraine’s Nafto- gaz at the 11th hour of negotiations.
Gazprom is eager to offload the gas it already has in storage in Europe. As such, its shipments to the continent are projected to fall by 25% year on year this month to 13.0-13.3bn cubic metres, Interfax calculated, based on the statistics of transmission system operators (TSOs). This marks the lowest monthly amount since 2015.
Supplies were down 20% y/y in the first week
of January, according to Interfax.
On paper, Gazprom’s gas shipments to Europe
and Turkey remained strong last year, totalling 199 bcm – just 2 bcm less than the record set in 2018. However, around 30 bcm of this gas was put into storage rather than used by consumers.
Gazprom faced increased competition in Europe last year from LNG suppliers, which delivered a record 76m tonnes of the super- chilled gas, driving down prices. Average prices at the Netherlands-based TTF, Europe’s largest gas trading point, were down 38% last year at $4.9 per mmBtu.
This has hurt Gazprom’s earnings, with rev- enues from its gas exports dropping 15% last year to $37.74bn. The company sold its gas to the EU at an average price of $169.8 per 1,000 cubic metres in 2019, versus $250 in 2018.
European prices are predicted to slide further this year, as the continent’s LNG imports con- tinue rising as a result of new supply coming on stream and bearish market conditions in Asia.™
French LNG imports hit 10-year high in 2019
FRANCE
French gas demand only saw a modest increase.
FRENCH LNG imports soared to a 10-year high in 2019, local transmission system opera- tor (TSO) GRTgaz reported last week, causing a steep fall in gas prices.
The country took 219 TWh of LNG during the year, equivalent to around 20.9bn cubic metres of regasified supply, GRTgaz said. This marks a 87% increase year on year, it said.
“The return of LNG [to Europe], which had mainly gone to Asia in the aftermath of the Fuk- ushima nuclear accident, has helped diversify gas sources in Western Europe and made gas prices competitive on the wholesale market in France,” the operator said.
France does not produce any oil and gas of its own, relying on a mix of LNG, mostly sourced from Algeria, and piped gas from Norway and Russia to cover its needs. The surge in LNG imports came despite France seeing only a mod- est increase in gas demand of 2% to 451 TWh
(43 bcm), caused by higher consumption in the power sector.
Spot gas prices in France dropped over 40% y/y in 2019 as a result of the supply glut, to €13.60 ($15.00) per MWh, GRTgaz said.
The country’s re-export of gas meanwhile came to 115 TWh (11 bcm) last year – a record volume and up 72% compared with the amount transited in 2018. Its exports to Spain and Swit- zerland rose by nearly 75%, according to GRT- gaz. Spanish gas demand climbed 14% last year, following a spike in consumption by industrial users and power plants.
LNG importers across Europe increased pur- chases last year, taking advantage of record low prices, driven down by rising global supply and lacklustre demand in Asia. The continent took around 95 bcm of regasified LNG during the year, up 88%, while its imports via pipeline came to 425 bcm, down 5%. ™
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Week 04 30•January•2020