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Gazprom Finally Concedes Tough Times Ahead For Gas Exports, Prices

Gazprom Skyscraper

Gazprom admitted today that its gas exports to Europe will fall in 2019, Reuters reported on Thursday, meaning that its 200.8 billion cubic meters of gas it shipped in 2018 to Europe and Turkey is now a thing of the past.

Gazprom had previously said it would maintain this high level of exports. It will also ship gas at lower prices, Gazprom indicated, adding insult to the injury.

Gazprom revenues are responsible for 5 percent of Russia’s economy.

In 2018, Gazprom Export LLC’s website shows, Western European countries made up 81 percent of its exports, led by Germany, while Central European states accounted for 19 percent. Russia controls about 35 percent of Europe’s total gas market.

Prior to its bang-up year in 2018, Gazprom had exported 192.2 bcm in 2017. This is the level that Gazprom is expecting for 2019 as well. For prices, Gazprom is expecting a decrease of 13 percent this year, to $215 per thousand cubic meters.

The reason for its gas export decrease in 2019 is sluggish demand, not to mention that Russia’s gas exports have become—or perhaps has always been--somewhat of a political hot potato.

Nevertheless, Gazprom’s Q2 net income rose to $4.55 billion—a 16% increase year over year, Gazprom reported on Thursday, although this was on the back of better foreign currency rates, rather than increased gas flows or prices.

Just last October, Russia was boasting its prowess in shipping record volumes of gas via pipelines to Europe, despite the United States’ efforts to steer Europe away from purchasing Russia’s gas.

Gazprom announced today that it had begun filling its pipeline to China, the Power of Siberia, with gas. Shipments are expected to start next year.

By Julianne Geiger for Oilprice.com

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