Page 8 - FSUOGM Week 11

FSUOGM PIPELINES & TRANSPORT FSUOGM
Gazprom sees export revenues drop 40% in Jan
RUSSIA
Gazprom’s exports to Europe could fall 5% this year, wiping the same percentage off its EBITDA.
EXPORT revenues at Russian gas giant Gazprom slumped 41% year on year in January, landing at slightly above $3bn, Vedomosti reported on March 11 citing Federal Customs Service (FTS) data.
In physical terms exports were down 11% to 18.3bn cubic metres (bcm), according to the FTS, which did not provide a breakdown of sup- ply destinations. Interfax previously reported that Gazprom’s deliveries to non-CIS states totalled 13.4 bcm in the month.
Since January, Gazprom has no longer released monthly export reports to the press, and it did respond to Vedomosti’s request for information.
After several years of sending record levels of gas to Europe, Gazprom saw deliveries fall last year to 199 bcm from 2020 bcm in 2018. The decline came on the back of increased LNG imports, unusually warm weather and sharp declines in deliveries to two of its key markets, Germany and Turkey.
These factors have affected shipments this year as well. Sales have also been weaker as a result of record high volumes of gas storage in Europe, accumulated last year amid concerns that Russia and Ukraine would fail to reach a new transit contract. The pair struck a five-year deal in late December.
Almost 57% of Gazprom sales to Europe are
priced according to spot rates at European gas hubs. These rates dropped almost one and a half times in January to $148 per 1,000 cubic metres. At the Netherlands’ TTF hub, gas for April delivery currently costs just $101 per 1,000 cubic metres.
The coronavirus (COVID-19) outbreak has also weighed down on gas demand expectations since February, causing prices to sink further.
Vedomosti noted that the Russian budget would also suffer from the decline in Gazprom’s export revenues. The budget will receive only $900mn in export duty from the company’s overseas supplies in January, versus $1.5bn in the same month last year. Export duty is currently set at 30% of the sales price.
The Russian Finance Ministry has based its budget for this year on receiving RUB700bn ($9.5bn) in gas export duty, equivalent to 0.6% of GDP. This tax will be raised not only from Gazprom’s exports but also those of its private rival Novatek.
Russia also relies on the state-owned compa- ny’s profits as a source of revenue. Moscow-based BCS Global Markets warned in a research note on March 12 that if the current market situation remains unchanged, Gazprom will lose $0.8bn or 5% of its forecasted EBITDA for 2020. The Moscow-based investment bank said it antic- ipated Gazprom’s export volumes to Europe declining 5% y/y in 2020 to 190 bcm.™
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w w w . N E W S B A S E . c o m Week 11 19•March•2020