The value of Russian gold exports has exceeded the country's proceeds from natural gas exports for the first time in Russia's modern history, due to low demand and prices for natural gas and surging gold exports, estimates from Russia's central bank and customs showed.
Russia's exports of gold reached US$3.58 billion in April and May, according to customs data reported by business outlet RBC. To compare, in those two months, Russia's gas giant Gazprom, which has the monopoly in natural gas exports via pipeline, sold US$2.4 billion worth of natural gas outside Russia.
According to preliminary estimates of Russia's central bank, Russia's pipeline natural gas exports stood at US$3.5 billion for the entire second quarter, less than the value of gold exports in just two of the three months in the same quarter.
For the first time in modern Russian history, the value of gold exports has exceeded the value of natural gas exports - natural gas exports had brought more revenues to Russia than gold since at least 1994, Maxim Khudalov, Head of the Sustainable Development Risk Assessment Group at ACRA, told RBC.
Exports of gold surged in part due to the central bank's decision not to buy gold, according to Khudalov.
In natural gas exports, Gazprom's natural gas exports of US$3.5 billion in Q2 2020 were half the exports for the first quarter, and were 2.6 times lower than for the second quarter of 2019. The volumes of gas exports also significantly dropped - by 21 percent in April and May 2020 compared to the same period of 2019.
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Due to the low demand because of the pandemic, the high storage levels around Europe, and the warmer weather, the export price of Russian gas in May nearly halved compared to the price in May 2019.
Gazprom's natural gas exports are set to drop this year to the levels last seen in 2015, Dmitry Marinchenko, Senior Director and lead analyst on EMEA Oil & Gas at Fitch Ratings, told RBC.
According to recent estimates from Reuters and Refinitiv, Gazprom's share of the European market has dropped from 38 percent a year ago to 34 percent now, due to the record stockpile of natural gas in northwest Europe and Italy.
By Charles Kennedy for Oilprice.com
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