Page 12 - GLNG Week 07 2021

GLNG EUROPE GLNG

EU imports of Russian gas surge in January,

despite objections to Nord Stream 2

PERFORMANCE AS leading EU countries lobby Germany to stop
the construction of Nord Stream 2, the same
countries have been dramatically increasing
their imports of Russian gas as a cold snap sweeps
the Continent, according to Russian national gas
company Gazprom’s financial accounts.
France has been one of the most vocal crit-
ics of the new pipeline that will connect Russia’s
Yamal gas fields with Germany, but it has bought
43% more Russian gas so far this year, according
to Gazprom’s books, RT reported.
The unusually cold weather in the last few
months has worked to undo the gas glut that
built up during last year’s heating season when
the winter was mild.
That was compounded by uncertainty over
whether Russia and Ukraine would renew their despite concerns over Nord Stream 2. Italian
gas transit deal, which led both sides to build gas purchases have also grown by 112.7% so far in
reserves in storage in case a deal failed to tran- 2021, with Poland – one of Moscow’s harshest
spire. Likewise, European countries anticipating critics of the new pipeline – also increasing its
a break in gas transits from Russia also built up imports by 63.7%.
reserves in underground facilities. Gazprom’s Russian Deputy Prime Minister Alexan-
books have revealed that France’s underground der Novak told TV station last weekend that
gas storage facilities are less than 30% full and obstruction efforts are in vain, and the 95% com-
that it has turned to Gazprom for more fuel. plete pipeline will eventually be finished.
“Gazprom has increased its exports to France The increase in demand will also improve
by almost 1.5 times since the beginning of the Russia’s budget forecast. Gazprom exports’ price
year,” Gazprom said in a report. “The demand forecast for 2021 was raised to over $200/mcm
for natural gas in European countries against the from the $170/mcm budgeted only in Decem-
background of a cold, frosty winter continues to ber, Kommersant reported, quoting Gazprom
grow, and the occupancy of European under- CFO Alexander Ivannikov.
ground gas storages continues to shrink.” All in all, Gazprom reported that non-FSU
The surge in demand has also had an impact exports were up 36.5% year on year to 27.5 bcm
on the price of gas, which has almost doubled for the first one and a half months of 2021. Gaz-
in the last few months. Gazprom’s outlook for prom booked additional capacity of 14.2 mcm
The gas glut the key European gas market in 2021 has signifi- per day for transit via Ukraine for March at an
cantly improved according to analysts.
auction last week, Interfax reported.
of last year “Gas storage levels reveal why. Very cold Gazprom agreed to ship 40 bcm per year via
is already weather settled over first NE Asia, then Central Ukraine from 2021-24. Gas production in Russia
Europe, driving up gas demand, causing a tem-
decreased from 738.4 bcm in 2019 to 692.9 bcm
unwinding as porary global LNG shortage. This in turn caused in 2020, and its share of production in Russia
gas prices to rise not just on spot markets, but decreased from 67.7% to 65.3%. Gazprom did
record high levels across the curve, as European gas storage was not use the full 65 bcm quota booked for 2020
rapidly depleted,” BCS Global Markets said in a due to the large amount of gas in storage. How-
of gas storage note. ever, this year the new deal calls for a reduction
“This time last year, storage was at 74bn cubic of transits via Ukraine to 40 bcm, but it already
begin to fall metres, or c66% full, 10ppts above the 10-year seems likely that Gazprom will use all of that
because of the average of 56% full in mid-February. It presaged quota and more.
a difficult 2020 – LNG battled pipe gas for stor-
The gas glut of last year is already unwinding
cold weather. age, driving gas prices driven to historic lows of as record high levels of gas storage begin to fall
c$1/mmcf (c$35/mcm). Situation began to right because of the cold weather. Underground stor-
itself in December. The situation began to cor- age in Europe is 47.9% full vs. 68.2% full in Feb-
rect in December with severe cold in NE Asia ruary 2020 and 48.5% full at this time in 2019.
and continued with cold air mass sitting over “The first quarter of 2021 is starting much
Central Europe for much of February. As of 14 stronger than expected, with demand likely
February, storage had fallen to 42% full or to c48 coming in higher and prices likely to be above
bcm, a c26 bcm gap vs mid-February 2020.” our previous forecast due to higher spot and
Gas exports are on the rise across Europe Brent prices,” BCS GM said.™

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