Page 120 - RusRPTJun21

9.1.1b Oil and gas sector news
Gas prices on May 7 reached $320/kcm on Monday, despite the warm weather in Europe. In May, LNG deliveries to Europe are down 16% m/m in May to date (down 18% y/y), according to Interfax citing GIE. The new TTF price level is the highest since January and follows a string of similar highs recorded over the past couple of weeks . This is likely due to the still high demand as a result of the ongoing gas injection into storage (the current saturation level is at 31%, the lowest over the last five years), as well as the lower LNG supply. In our view, this news is potentially positive for Gazprom, which has recently confirmed (through the Head of Gazprom Export at the Investor Day) that the company does not plan to increase its deliveries in May dramatically, thereby supporting European gas prices.
Gazprom refused to increase transit through Ukraine in June, which prompted accusations from Kyiv that the company is creating a gas shortage in the EU.
Gazprom in no hurry to expand Ukrainian transit: On May 25 Ukraine’s gas pipeline operator offered an additional 64mmcm/d of transit at ‘auction’ to the only available bidder – Gazprom – which refused. This leaves Gazprom with its base 2021 contract volume of 109mmcm/d (40bcm/yr) plus an additional 15mmcm/d booked at auction on May 17.
Price more important than volume for Gazprom: Keep in mind that Gazprom's EBITDA is more sensitive to prices than volumes, so the
120 RUSSIA Country Report June 2021 www.intellinews.com