Gazprom set another record for exporting gas to foreign countries in April, taking advantage of the problems of other suppliers - Norway and Algeria, as well as the extremely low level of gas reserves in European storage facilities after a cold winter. The collected pace allows Gazprom the first time in history to export 200 billion cubic meters of gas to Europe at the end of the year. This can be prevented by the arrival of significant volumes of liquefied gas to the European market and the possible increase in gas prices, which may lead to its displacement by coal in generation.
Gazprom maintained the March growth rates of gas exports to non-CIS countries (the EU without taking into account the Baltic, but taking into account Turkey), putting 15.9 billion cubic meters. This is the highest level of supplies in the history of Gazprom this month. For four months from the beginning of the year, Gazprom exports increased by 6.3%, to 70.3 billion cubic meters, which in terms of a year already significantly exceeds 200 billion cubic meters. Gazprom has been setting absolute records of exports for two years (194 billion cubic meters in 2017, taking into account trading), and a new record is likely this year. The highest in January-April was the increase in deliveries to the Netherlands (98%, or 1.4 billion cubic meters), Austria (76%, or 1.9 billion cubic meters) and Germany (12.4%, or 2.3 billion cubic meters ).
The growth in supplies in April was facilitated by the problems of two other key external suppliers of the EU - Norway and Algeria. According to Platts, Norwegian exports of gas pipelines in April fell below 9 billion cubic meters due to problems in the Skarv field and repair work on large gas pipelines and gas treatment facilities. According to the Norwegian Petroleum Directorate, in May, gas production in Norway should grow to 10.1 billion cubic meters, and then may drop slightly in June-July. As for supplies from the south, in April gas exports from Libya to Italy almost stopped due to problems on the Greenstream gas pipeline. Deliveries from Algeria to Italy decreased by 25%, to 1.1 billion cubic meters, due to the low selection of the Italian Eni, because due to the purely oil binding of the price under the Algerian contract, this gas became more expensive than the export of Gazprom.
Although the cold weather in March had a key impact on Gazprom's supply this year, there are two long-term factors that should support a high level of exports in the summer. First, gas reserves in underground storage facilities in Europe remain record low: at the beginning of May they amounted to 27.5 billion cubic meters, which is 6.2 billion cubic meters less than on the same date in 2017. Secondly, the problems at the Groningen field in the Netherlands (see "Kommersant" on March 30) are likely to lead to a drop in production in Europe - this is already noticeable in the growth of Russian gas imports since the beginning of the year.
The rise in oil prices and the relatively tense situation with the gas balance in the EU lead to an increase in gas prices. Now spot prices in Western Europe are in the range of $ 230-250 per 1,000 cubic meters, which is about $ 50 higher than a year ago. Forwards for June on the main hubs below - about $ 220-230 per 1 thousand cubic meters. Spot prices for LNG in Asia are still higher (Platts JKM with delivery in June - $ 293 per 1,000 cubic meters), but the traditional reduction of the "Asian premium" in the summer can attract LNG to Europe, reducing the market niche for Russian gas. But Gazprom recently openly admitted that it has moved far away from purely oil binding in gas contracts: the company sells a third of the volumes at the quotes of hubs, and a third by the hybrid scheme (oil indexation with a price cap at the price of the hub, ). Monopoly can now especially not be afraid of losing price competition to other suppliers.
But the increase in gas prices as a whole can lead to the fact that energy (the main consumer of gas in the EU) will begin to transfer to coal, the price of which, judging by forwards, should rise slightly in the summer. A similar situation in 2012-2014, when gas prices exceeded $ 350 per 1,000 cubic meters, led to a sharp drop in sales of Gazprom in Europe.