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Gazprom’s sales of natural gas to Turkey and Europe, excluding the former Soviet Union countries, dropped to 582 million cubic meters per day in February, down by 34 million cubic meters per day from the January average, on the back of lower demand and a less attractive price compared to European hubs.
In January, sales had averaged 616 million cubic meters/day, Platts reports, citing Gazprom data.
In February, however, Gazprom was unable to use the higher capacity of the OPAL line because of ongoing litigation, after it had increased the Nord Stream/OPAL deliveries in January. Deliveries to Europe via Ukraine went down during the last week of February, which caused Ukraine’s Naftogaz to issue a warning that pressure in the Russian gas transmission system at the entry to Ukraine had dropped to record low.
Still, in January and February combined, Russia’s sales to Europe and Turkey increased by 21 percent compared to the same period last year. Sales to Greece, for example, rose by 20.6 percent compared to the same period of 2016, Gazprom said. Exports to Germany, France, and Slovakia also increased in the first two months of 2017.
For February, however, the drop-in sales was also due – apart from lower demand - to the converging prices in the Russian oil-indexed gas prices and the day-ahead price at European hubs.
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According to analysis by Platts, the oil-indexed price range is still slightly cheaper than prices at the TTF hub, but in the near future the TTF price is expected to drop well into the oil-indexed price range.
Earlier this week, Gazprom’s Deputy Chairman Alexander Medvedev said that the company would increase how much it charges for its natural gas in the European Union this year, to US$180-190 per 1,000 cubic meters, adding that Europe remains a priority market for the company. To compare, last year’s average price of Gazprom’s gas for Europe was US$167 per 1,000 cu m, the lowest in 12 years.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.