Risks to Gazprom’s exports have risen since Russia invaded Ukraine Feb. 24. The conflict triggered harsh financial sanctions, leading European customers to speed up plans to reduce imports of Russian gas. Russia’s response has included insisting on payment for Russian gas in rubles, which some countries have already refused to do, leading to supply suspensions, reports SP Global.
Gas production
Gazprom’s gas production also fell in the first four months of 2022 – down 2.5% on the year to 175.4 billion cu m, according to the statement. The company previously said that its 2022 gas production plan is 494.4 Bcm, which would be a 4% drop on 2021.
Concerns about supply security have led to significant volatility in gas markets. The European benchmark TTF month-ahead price hit a record high of Eur212.15/MWh on March 8, according to S&P Global Commodity Insights price assessments. It was last assessed at Eur 95.30/MWh on April 29.
EU attempts to bolster gas supply security since the invasion also include a target for member states to fill storage sites to 80% capacity by Nov. 1 this year.
Gazprom said that replenishing European storage is a “serious challenge” due to technological limitations on daily injection volumes.
“Furthermore, the total amount of gas available on the European market is highly dependent on demand in the growing Asian market,” Gazprom said.
China shipments
Part of Russia’s strategy to mitigate the impact of the deterioration in its relationship with EU countries is to increase supplies to non-sanctioning Asian countries.
Gazprom said that it increased its supplies to China under its long-term agreement with CNPC in early 2022.
“Delivery volumes in the first four months of 2022 exceed the same period last year by almost 60%,” Gazprom said.
Gazprom supplies gas to China via the Power of Siberia pipeline. Deliveries via the route started in December 2019 and totaled 4.1 Bcm in 2020. Since then Gazprom says that flows have increased, but has yet to release full 2021 supply data. The pipeline has a design capacity of 38 Bcm/year.
Gazprom is also planning another route to China via Mongolia with a planned capacity of 50 Bcm/year as well as a new Far Eastern route to carry up to 10 Bcm/year.
Gazprom’s natural gas exports to non-CIS countries totaled 50.1 billion cubic meters in the first four months of 2022, down 26.9% on the same period in 2021, the company said in a statement May 1.
Did you subscribe to our daily Newsletter?
It’s Free! Click here to Subscribe
Source: SP Global
