CEO Miller tells Putin ‘too early’ for 2020 conclusions
Sharp fall in gas exports to Europe in January, February
Gazprom production capacity pegged at 545 Bcm/year
Russian gas giant Gazprom is “optimistic” about the European market in Q3 and Q4, its CEO Alexei Miller told Russian President Vladimir Putin Friday, saying it was “too early” to draw conclusions about the state of the market from the first few months of the year.
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Russian gas exports to Europe have fallen sharply since the turn of the year, with supplies in January and February down by some 25% year on year to 20.4 Bcm, according to an analysis of S&P Global Platts Analytics data.
The fall in supplies comes amid weak European gas demand caused first by a very mild winter and record high gas storage stocks, exacerbated by coronavirus-related lockdowns across Europe that have cut industrial gas demand.
Miller added that the market could recover in the run-up to next winter. “We are optimistic about the third and fourth quarters. It is probably too early to draw any preliminary conclusions from the first months of the year,” Miller said.
Gazprom has also stopped publishing monthly production and export data since the start of 2020 having issued short statements at the start of each month over the past few years.
It did say last month though that it planned to export around 200 Bcm/year to Europe and Turkey over the next decade as it looks to keep a share of around 35% of the European market.
Its supplies to the Far Abroad — Europe plus Turkey, but minus the countries of the former Soviet Union — totaled 199.3 Bcm last year, a slight drop on the record 201.4 Bcm in 2018.
Gazprom said the company had “retained its front-runner” position on the European market in 2019 — taking a 36% market share — despite an increase in LNG supplies to Europe.
Miller told Putin Friday that Gazprom’s current gas production capacity was 545 Bcm/year — giving it a spare capacity volume of some 45 Bcm/year given 2019’s total production of 500.1 Bcm.
Miller said Gazprom had also looked at the feasibility of a second gas pipeline to China to run via Mongolia at Putin’s request.
The so-called western route — which envisaged a 30 Bcm/year capacity pipeline built to serve western China — was originally planned with entry into China via Russia’s thin border connection with China to the northwest of Mongolia.
However, Putin asked Miller in September last year to consider whether the route would be viable via Mongolia itself.
Miller — calling the pipeline Power of Siberia 2 — said it would be possible to supply up to 50 Bcm/year via this route.
“Accordingly, we are ready to continue work,” Miller said. “I ask you to give an order to begin the pre-investment stage and for the start of design and survey work,” he said, which Putin agreed to.
Gazprom started commercial flows via the first Power of Siberia pipeline to China on December 1, and exported a total of 0.328 Bcm — an average of 10 million cu m/d — in the first month of operations.
The 2,200 km line is filled with gas from the giant Chayandinskoye field, with gas from the Kovykta field to be added to the supply later.
Gazprom has also envisaged a third pipeline route to pump gas to China from Russia’s Far East.