Page 7 - FSUOGM Week 03 2022

FSUOGM PIPELINES & TRANSPORT FSUOGM

Gazprom slashes European

supplies to multi-year low

EUROPE GAZPROM cut gas supplies to Europe in the accompanying the data.
first half of January by 41%, with the daily flow There was a limited reaction to Gazprom’s
Gazprom did not dropping to its lowest level since 2015. announcement from the market. In fact,
disclose a reason for the The Russian state gas supplier sent only 5.4bn European gas prices actually dropped on Jan-
sharp reduction. cubic metres of gas to countries outside the for- uary 17 when the announcement was made,
mer Soviet Union during the 15 days, versus 9.1 with the TTF February contract slumping by
bcm in the same period of 2021. 10%. The following day prices were unusually
Gazprom did not disclose a reason for the stable, with the February contract only up by
sharp reduction. But its production was stable 3.4%.
at 23.1 bcm in January 1-15, up 2.1% year on The impact of constraints with Russian sup-
year, whereas deliveries to the domestic market ply has partly been offset by a recent increase in
were 3.7% higher. Shipments to China were 50% LNG deliveries to Europe particularly from the
higher y/y. US, as well as warmer weather. As a result, prices
The company’s supplies to Europe have been have halved since the record highs they touched
unusually low since September, and the reasons in late December.
are unclear. Some EU politicians have accused Prices could climb once more, however, as
Moscow of using gas supply as a weapon, with- so far there is little indication of Russia restor-
holding supplies in order to exert pressure on ing supply during the rest of winter. Gazprom
Europe to approve Nord Stream 2’s launch and confirmed on January 17 that it had not booked
score other geopolitical concessions. Yet some any capacity to pump gas to Europe through the
analysts have cast doubt on this narrative, spec- Yamal pipeline next month that runs through
ulating that Gazprom may be at its maximum Belarus and Poland to Germany.
production capacity, after cutting investments Insufficient gas in storage is another concern.
in 2020 in the wake of the coronavirus (COVID- Data released by Gas Infrastructure Europe
19) pandemic. (GIE) shows that storage utilisation in the EU
“The company’s gas deliveries are carried out and UK fell to under 47% capacity on January 18.
as requested by consumers in line with contrac- In previous years utilisation has been at around
tual obligations,” Gazprom said in a brief note 70% or more at this time of year. ™

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