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Russia’s Gas Giant Will See Revenues Surge 85% This Year

Russia’s gas giant Gazprom is set to rake in 85% higher revenues this year, to around $100 billion, as natural gas prices surged following the Russian invasion of Ukraine and the significant cut to Russian pipeline gas exports to Europe, an analyst told the Financial Times on Friday.

By choking supply to Europe, Gazprom has driven natural gas prices three times higher than last year’s price, which more than offsets the lower volumes Russia is sending to Europe, Ron Smith, an oil and gas analyst at BCS Global Markets, told FT.

“You can make a solid case that Gazprom will earn more from supplying less gas,” according to the analyst.

After having gradually cut flows via the key route to Germany all summer, blaming gas turbine repair issues, Gazprom said last week that the Nord Stream gas pipeline would remain closed indefinitely. The Kremlin blamed on Monday the Western sanctions for this situation.  

“When it went offline on 31 August, Nord Stream 1’s 32mcm/day flows represented about 3% of total European supply. While a small amount, these molecules will need to be replaced by much more expensive methods – either drawing additional LNG from the global market or by destroying demand in Europe,” Thomas Rodgers, gas markets analyst at Independent Commodity Intelligence Services (ICIS), said on the day on which Gazprom said Nord Stream would halt supply indefinitely.

As of September 2, remaining Russian flows to Europe accounted for about 7% of European supply, including LNG sendout, compared to more than a third of all supply to Europe coming from Russia at this time last year, ICIS notes. 

The EU is looking to limit Putin’s revenues from gas, and European Commission President Ursula von der Leyen said on Wednesday the Commission would propose a price cap on Russian gas as “We must cut Russia's revenues which Putin uses to finance this atrocious war against Ukraine.”

Also on Wednesday, Vladimir Putin threatened the West that Russia would stop supplying all energy products to Europe if the EU and its Western allies impose price caps on Russian oil and natural gas.

Several EU member states are opposed to the Commission’s plan on a price cap on Russian gas amid concerns that Putin would retaliate with a complete halt of all pipeline gas deliveries to Europe.   

By Tsvetana Paraskova for Oilprice.com

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  • Lee James on September 11 2022 said:
    Well, it is all out in the open now. Russia is willing to go ahead on war, war that openly drives fuel prices up. No one believes now that external factors, like turbines repaired in Canada, are behind higher prices.

    Now all that stands between Putin-planning and a kow-towed West is will and determination to defy seeming impossible odds.

    Ukraine is indeed an inspiration.
  • George Doolittle on September 10 2022 said:
    There isn't going to even be a Gazprom at the open on Monday at the AM 930 Eastern Standard Time.

    The entire Russia Polity has suddenly collapsed *"gone up in flames over fever dreams of Putinia -Stan."* All of Europe East and West to include Great Britain could alone field an Army in excess of 10 *MILLION* able bodied but of course you have to throw in all of the USA plus Canada plus Australia and who knows who from inside Russia proper.
  • Mamdouh Salameh on September 10 2022 said:
    This goes to show that every time the hapless EU leaders make proposals like the stupid and ill-thought one of proposing a price cap on Russian gas, prices surge higher inflicting more financial damage on the EU economy and more pain on European customers whilst enhancing the export revenues of Russia’s gas giant Gazprom’s to an estimated $100 bn this year.

    If the EU wants plentiful and cheap Russian gas, it will have to lift sanctions against Russia or freeze this winter. European gas tanks are estimated to be half full. Without Russian supplies they will never be filled ahead of winter.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert
  • John on September 09 2022 said:
    how? if Gazprom cuts off supply to Europe its revenues collapse. 74% of all gas exported both pipeline and LNG is to Europe. even if russia could ramp up LNG shipments which it can't , increase pipeline deliveries to Asia, which it can't, those customers are unlikely to pay the cost that it cause especially its 2 biggest customers, India and China. if it sells to them at heavily discounted prices, russias export revenues still collapse...

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