Page 6 - EurOil Week 05 2023

EurOil COMMENTARY EurOil

Russian gas pipe flow dips to

record low in Jan

The slump comes amid warm weather and ample LNG supply and large volumes

of gas in storage.

RUSSIA RUSSIAN pipeline gas flow to Europe dipped mcm in January, compared with 81.9 mcm in
to a record low in January, down 30% compared December.
WHAT: with supplies in December, while experts warn Gazprom has not disclosed its own statistics
Gazprom cut gas flow by that there could be significant further downside for exports and production since the start of the
30% in January. risk to the country’s deliveries. year, although it typically does so for each month
Europe has enjoyed unseasonably high tem- in the first week of the following one. It reported
WHY: peratures in recent weeks, and with ample LNG that its exports in 2022 to non-former Soviet
The company was supply and gas volumes in storage, this has states slumped 45% in 2022 to 100.9 bcm, repre-
responding to resulted in prices dropping to the pre-Ukraine senting a post-Soviet low.
unseasonably high war level, despite the steep drop in Russian deliv- Russian gas flow to Europe is unlikely to
temperatures primarily. eries. This has caused gas hub prices to slide to grow significantly this year but further cuts
the level not seen since before Moscow launched could drive prices higher, the Oxford Institute
WHAT NEXT: its invasion of Ukraine. for Energy Studies (OIES) said on January 30.
There is limited upside According to Reuters, citing its own calcu- “The outlook for Russian pipeline gas sup-
for Russian gas supply, lations, Gazprom’s gas exports to Europe fell ply to Europe has only limited upside potential
but the downside could in January to some 1.8 bcm versus 2.5 bcm in and there is significant possibility of a further
drive prices higher given December via Ukraine and the TurkStream decline, in particular with regard to gas transit
how tight the market is. pipeline. These are the only routes still used for via Ukraine,” OIES said in a research note.
delivering Russian gas via pipeline to Europe. The worst has already happened, however,
Gazprom cut supply via both the Yamal-Europe OIES said, noting that Russian gas flow from
and Nord Stream 1 pipeline last year, and the lat- Russia is now less than 11% of the level it was in
ter was left inoperable last September as a result January 2019. The “fear premium” generated by
of suspected sabotage. concern over how the European market would
According to European gas transmission balance without substantial deliveries of Russian
group Entsog and Gazprom’s daily reports on gas has been replaced by soaring prices that have
transit through Ukraine, the company’s average maintained the physical balance in the current
daily gas deliveries to Europe came to only 58.1 tight market.

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