Page 8 - FSUOGM Week 02 2020

FSUOGM PIPELINES & TRANSPORT FSUOGM
Gazprom exports to Europe see sharp fall in early 2020
EUROPE
Gazprom wants to use up some of its gas stored in Europe.
THE New Year began with a sharp decline in Gazprom’s exports to Europe, in part due to low demand and Gazprom’s desire to exhaust reserves stored abroad.
In preparation for a possible show down with Ukraine that could have ended with Russia cutting off its transit gas via Ukraine, Gazprom built up significant stores of gas in Europe so as to be able to meet its obligations to its European customers. Now a new deal has been signed with Ukraine that will see 65bcm of Russian gas tran- sit Ukraine this year, Gazprom needs to empty these storage facilities.
As a result average daily export volumes have decreased by over 20% compared to the end of December.
The biggest victim of the drop in Gazprom exports is the Ukrainian transit route, where volumes have declined almost three-fold. On December 30, Gazprom shipped 262.3mn cubic meters per day (cmpd) through Ukraine.
By January 7, this figure decreased to 91.2mn cmpd. Per the new Russia-Ukraine gas tran- sit contract, Gazprom must deliver 65bn cubic meters through Ukraine in 2020, which amounts to an average daily volume of 180mn cmpd—or twice the current level of exports.
Gas supplies to Poland via the Yamal-Europe
pipeline have also fallen significantly, by over 20%. This is unusual as the Yamal-Europe pipe- line is considered Gazprom’s most efficient tran- sit route. During both the cold winter of 2018 and the warm winter of 2019, the pipeline con- sistently transported over 100mn cmpd. On Jan- uary 7, it transported 82mn cubic meters.
The decline in transit via the Ukrainian and Yamal-Europe pipelines is in part mitigated by the launch of the Turkish Stream (aka Turk- Stream) pipeline this January. However, current data show that only half of Turkish Stream’s capacity is being used.
Experts explain the sharp decline in Gaz- prom exports in two ways: first, Europe is experiencing a warm winter so demand is low; and second, Gazprom likely wants to use up the gas reserves in Europe that were accumu- lated late last year. Due to the uncertain out- come of negotiations with Ukraine’s Naftogaz, Gazprom pumped record volumes to Europe’s underground storage facilities in Decem- ber. European consumers are now opting to receive their gas from these facilities due to faster transit times and pricing considerations. If Europe’s warm weather means these reserves are exhausted slowly, it could spell bad news for Gazprom’s financials. ™
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w w w. N E W S B A S E . c o m Week 02 15•January•2020