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using the average for the year (109.6mcm/day). Based on data from six compressor stations and Nord Stream reported by Bloomberg, total exports from Russia are increasing, having bottomed around 8 January. Using Gazprom's reported data for the first 15 days of January, we estimate exports to Europe and Turkey could be between 9.8-10.4bcm, depending on the export rate for China.
European underground storage was 38.99% full as of Saturday, 29 January, according to GIE data, which is enough gas for nine weeks of supply, according to Platts.
Gazprom has not publicly commented on the decrease in exports to Europe beyond stating that it is meeting all of its contractual obligations. On the back of the increase in LNG imports to Europe, the TTF Day-Ahead price remains below EUR 100/MWh and is at $1,071.9/mcm today. The Japan-Korea Swap M1 LNG price is around $1,034/mcm, which is not far off the current European price. If prices rise in Asia in February, we could see a decline in LNG exports to Europe.
For now, despite lower volumes, and given that hub prices are above $1,000/mcm and the Brent price is $89.4/bbl, we do not see downside risk to our 2022 estimates for Gazprom. We think that Novatek should also benefit from the higher oil price and to some extent from higher gas prices, although the Russian domestic regulated market accounts for the lion’s share of their gas sales. We do not expect additional color from Gazprom on the decline in exports to Europe when it publishes its export data tomorrow, which could be due to some geopolitical reasoning.
On a separate note, Head of Germany’s Federal Network Agency Jochen Homann said that Nord Stream 2 is unlikely to be approved in 1H22, Kommersant reported. The reason for the delay is related to some steps still not completed from Nord Stream 2 AG’s side. We view the delay as neutral, as we did not expect Nord Stream 2 to export significant volumes of gas early this year.
OPEC+ are to increase oil production by 400kbbl/d in February, under the decision from 4 January. At the same time, Interfax reports that OPEC+ might not supply more oil to the market than planned, due to accidents and repairs in a number of countries, and the lack of investment in recent years. The next OPEC+ meeting is to be held on 2 February 2022.
The European Commission has included gas and nuclear generation into its ‘green taxonomy’ draft document, Vedomosti reports. Both these energy sources were named as helpful for the energy transition, but only during a specified period. The document allows investments into new nuclear generation until 2040 or 2045 and into new gas generation until 2030 or 2035 (the dates depend on whether gas generation replaces coal generation). Such
87 RUSSIA Country Report February 2022 www.intellinews.com