Russian state-run gas giant Gazprom is exporting record volumes of gas to Europe and Turkey, with lower prices and colder weather boosting demand.
After slumping in 2012, Gazprom Export volumes reached 161.5 billion cubic meters in 2013-with the biggest increases to Germany, Italy and the UK--beating its last record in 2008, when it exported 160 billion cubic meters.
Helping to drive the spike in demand in Europe are lower gas prices clinched under long-term supply contracts, coupled with reduced supplies in Europe as cargoes of liquefied natural gas (LNG) are diverted to the more lucrative Asian markets, where they fetch a higher price.
Average prices for 2013 were just over $380 per 1,000 cubic meters, down from about $385 in 2012.
Germany remains the largest Gazprom customer in the European Union, and for 2013 the country increased its purchases of Gazprom gas by over 20%, while Italy's imports spiked by more than 60%.
Gazprom supplies over 25% of Europe's entire gas needs, registering over 150 billion cubic meters of exports to Europe annually.
Russia is now working on the South Stream pipeline project, which will bring Caspian gas to Europe by piping it to northeast Italy through the Black Sea, which should be realized at the end of 2015.
Europe's own Caspian pipeline preference, the Trans-Adriatic Pipeline (TAP) will pump Azeri gas through a pipeline running across Greece and into Italy. The pipeline plan was green-lighted in December, but in the end will only pump 10 billion cubic meters of gas annually into Europe. Gazprom transits 15 times that amount into Europe, so it won't put much of a dent in the monopoly.
In November, Gazprom won a long-term deal with Turkey to export gas to private companies.
Turkey's energy market regulatory authority gave private energy companies Akfel, Bosphorus and Kibar licences to import gas from Russia's Western Line over 30 years, while Bati Hatti natural gas company won a 23-year import license.
Bu. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com More