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Glut Or Deficit: Where Are Oil Markets Headed?

Glut Or Deficit: Where Are Oil Markets Headed?

Wildly diverging forecasts by oil…

Gazprom Adds New Gas Reserves, Auctions


Russia’s gas giant Gazprom expects to add major new domestic gas reserves this year, and may hold more auctions to sell gas to European hub markets, Reuters quoted Gazprom Export CEO Elena Burmistrova as saying on Tuesday.

Gazprom plans to raise its gas reserves by 470 billion cubic meters (16.6 trillion cubic feet) in 2017, following new developments in Siberia, the Yamal Peninsula, and around the Sakhalin island, according to Burmistrova.

“This is why Gazprom is investing in new infrastructure such as Nord Stream II and TurkStream,” Burmistrova said, as quoted by Reuters.

Last month, Nord Stream 2 AG—the project company whose sole shareholder is Gazprom—signed financing agreements for the Nord Stream 2 pipeline project with ENGIE, OMV, Shell, Uniper, and Wintershall. The five European energy companies have committed to provide long-term financing for 50 percent of the total cost of the project, which is currently estimated at US$10.34 billion (9.5 billion euro), with each European company funding up to US$1.034 billion (950 million euro).

Last Sunday, construction of the TurkStream gas pipeline began in the Black Sea near the Russian coast, Gazprom said in a statement.

At the end of 2015, Gazprom held a trial gas auction to sell gas for delivery to northwest Europe, and last summer auctioned gas for winter delivery to Europe in another breaking of tradition to stick to its practice of selling gas under long-term contracts in take-or-pay clauses. Back then, analysts saw the auctions as a tool for Gazprom to further increase its share of the European market by allowing more flexibility to buyers.

Related: Saudis Set To Cut June Crude Oil Exports To Asian Markets

Gazprom held a market share of around 34 percent of Europe’s gas demand last year—a record high. Gazprom’s Deputy Chairman Alexander Medvedev predicted in February that Gazprom’s share would rise further to 35 percent.

In a telephone interview with Reuters last month, Gazprom’s chief executive Alexei Miller said:

“Today, in 2017, we are beating our 2016 record highs by around 10 percent. So we can expect new records this year and Gazprom’s European market share is poised to rise.”

By Tsvetana Paraskova for Oilprice.com

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