Page 13 - FSUOGM Week 28 2020

FSUOGM PERFORMANCE FSUOGM
Gazprom loses 4% of market share in NW Europe this year
RUSSIA
Gazprom is facing off against LNG suppliers.
GAZPROM, Europe’s biggest gas supplier, has lost signi cant market share in the continent’s north-west because of the impact of the coro- navirus (COVID-19) pandemic and two mild winters, Reuters reported on July 10.
e company’s market share in Northwest Europe and Italy declined by 4 percentage points to 34% in the rst half from 38% previously, the news agency said. It cut deliveries to the region more than any other supplier.
Exports via its three main routes – Nord Stream, Mallnow and Velke Kapusany – slumped by 14bn cubic metres in the period, according to Reuters. e area’s second-biggest supplier, Nor- way’s Equinor, in contrast cut shipments by only 4 bcm, and its market share actually increased by 1 percentage point to 26%, capitalising on Rus- sia’s reduction.
LNG supplies to Northwest Europe and Italy increased, with their share rising 2 percentage points, while the share of North African imports slid 1 percentage point.
Gazprom pumped 199 bcm of gas to Europe last year. Although this was down from 202 bcm in 2018, it still represented a high level for the supplier, supported by increased gas- red power generation at the expense of coal, and a record high storage build-up in Europe.
In contrast, this year overall power generation has been much weaker in recent months because of COVID-19 restrictions. Furthermore, storage levels remain high, with some sites having run out of space.
At the same time, the same trends that had a negative impact on Gazprom’s sales last year
have continued into 2020. Temperatures were mild during the rst few months of the year, and LNG imports remain at record levels.
e pandemic has exacerbated a supply glut on the global LNG market, causing spot prices to plunge. is has made LNG spot cargoes cheaper than some pipeline supplies under long-term contracts that index prices to oil, with a typical time lag of six to nine months. Just under a third of Gazprom’s sales in Europe were still fully or partially oil-indexed last year, the company told investors in February.
Norwegian suppliers have been less a ected, as contracts use more gas hub-based pricing and have less volume exibility.
Gazprom has sought to offset lower con- tractual volumes by selling aggressively on its electronic sales platform (ESP). So far, more than 19 bcm of gas has been sold via ESP this year, according to data published by Gazprom Export.
Because of current oversupply, however, Gaz- prom has been selling more gas for future deliv- ery on ESP than usual. Some sold volumes will be shipped to customers as late as 2022.
e most popular destinations for ESP gas this year has been Germany and Slovakia. In both countries, the operators of gas- red power plants have seized some market share from generation based on other fuels, namely coal. However, the bigger factor has been compa- nies looking to store more gas this summer in Ukraine, which has taken steps to make its vast and underutilised storage capacities more attrac- tive to European traders. ™
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