Gazprom misses its 2021 target for gas exports to Europe

The Russian gas company’s exports have been closely scrutinised after tight supplies on the continent sent prices soaring

Wells at Bovanenkovo gasfield owned by Gazprom on the Arctic Yamal peninsula, Russia. Reuters
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Russian gas company Gazprom missed its own “conservative” target for 2021 exports to Europe, and those capped flows contributed to the continent’s worst energy supply crunch in decades.

Gazprom delivered 185.1 billion cubic metres to its main clients abroad, including Turkey, China and the EU, excluding former Soviet Union nations outside the bloc, chief executive Alexey Miller said in a statement on Sunday.

That was 3.2 per cent above 2020 levels, but lower than 2018 and 2019, which were about 200 billion cubic metres.

Deliveries to Europe and Turkey were about 177 billion cubic metres last year, according to calculations by Bloomberg News and BCS Global Markets based on Gazprom’s data. That fell short of Gazprom’s forecast for exports to Europe and Turkey of as much as 183 billion cubic metres – an estimate it has stuck to since the spring and maintained at the end of October, even as Europe clamoured for more supplies.

While Gazprom’s flows to Europe and Turkey were below the company’s outlook, they were in line with recent estimates from BCS Global Markets, said Ron Smith, the company’s senior oil and gas analyst in Moscow.

“It was clear in recent weeks that high prices had caused a reduction in nominations from its European customer base,” he said.

Flows to Europe and Turkey could be even lower – at about 175.4 billion cubic metres last year, based on assumption that Gazprom’s daily flows to China were more than a third above its contractual volumes in November and December, said Mitch Jennings, an energy analyst at Sova Capital.

Gazprom’s exports have been scrutinised as tight supplies in Europe recently sent prices soaring. With it being winter and the region’s stockpiles falling dangerously low, the company has sent only as much gas to EU clients as it is obliged to supply under long-term contracts. It has not offered spot cargoes for months.

It is not known why Gazprom has been reluctant to offer spot gas to the bloc. While the company has pointed to demand destruction as a result of surging regional prices, European officials say the Russian producer is intentionally withholding in the hope of speeding up approvals for the contentious Nord Stream 2 pipeline.

Gazprom does not break export data down by country, making it difficult to estimate 2021 flows to individual markets. But Mr Miller said the largest growth in deliveries was to Germany, Turkey and Italy. Flows to China exceeded Gazprom’s contractual obligations throughout 2021, Mr Miller said.

Daily exports outside ex-USSR nations in December, when the peak demand season often starts, averaged 439 million cubic metres – the lowest level for that month since 2014, according to Bloomberg calculations.

Gazprom’s gas output for 2021 reached 514.8 billion cubic metres, the highest since 2008. December daily production averaged 1.523 billion cubic metres, the highest since 2013 for that month.

With Russian pipeline exports to most EU countries capped in December, the bulk of the extra gas stayed at home as abnormally low temperatures set in during the final days of the year.

As temperatures plunged, deliveries to domestic clients in late December surged to as high as 1.656 billion cubic metres a day, Gazprom said, higher than its average daily production levels for December. To meet the demand, the company said withdrawals from local underground storage reached a five-year high.

Russia can afford to draw record amounts from its inventories as Gazprom filled the domestic sites with all-time high gas volumes of 72.6 billion cubic metres by November.

Updated: January 03, 2022, 4:00 AM
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