Tag Archives: gazprom export

Russian gas export price up in Dec, but Jan 2022 likely to slide to sub $500/mcm

  • Based on the Russian customs data released on February 7, the weighted-average price of Russian-origin gas to all export destinations (exc. China was $517 per 1,000 cubic meters (mcm) in December 2021, compared to our forecast of $580/mcm.
  • Based on customs data, we estimate that the price for Russian gas in Europe only (excluding FSU, Turkey and ESP sales) was $711/mcm in December. This is at a 28% discount to the average price of TTF December futures of $1,005/mcm. While the majority of Russian contract prices is linked to TTF futures, some of the contracts might be based on long-term/fixed prices, which explains discounts to hub prices.
  • Our pricing model shows that the weighted average price of Russian-origin gas to all destinations (exc. China) in January 2022 declined 8% MoM to $475/mcm and export volumes fell 20.9% MoM to 12.7 bcm. The fall in price is on the back of higher proportion of sales to FSU and Turkey, where prices are below the European level. Russian customs will report the relevant data in early March.
Gas-price_Dec21_customs_7Feb22_FINALDownload
  • The Russian gas price to European customers is estimated at $749/mcm, at a 46% discount to the average price of January TTF futures ($1,392/mcm) and 25% discount to TTF average spot price for January 2022 ($1,005/mcm).
  • This means that some Gazprom customers in Europe were buying Russian gas at a deep discount to headline hub prices. At the same time, Russian gas contracts with prices linked to next-month futures (est. 21% of total export to Europe in January) would have been more expensive ($1,392/mcm) than spot volumes in January ($1,005/mcm).

In the first week of February, the average price of TTF next-day futures ($935/mcm) has been below Russian contract prices based on dated futures ($1,002-$1,375/mcm). At the same time, Russia gas export to Europe (exc. Turkey and Ukraine) was up 24% MoM to 312 mn cu m/d (1-5 February), up from 251 mn cu m/d on average in January.

Gazprom in January: output near capacity points to higher export in coming months

  • In January, Gazprom produced 47.4 bcm of gas, up 1% YoY, according to the company’s statement on Telegram. This means that the average daily gas output was 1,529 mn cu m/d, up 16 mn cu m/d on the same period of last year. We note, however, that the daily average output is down from 1,540 mn cu m/d in mid-January to estimated 1,518 mn cu m/d in the second half of January.  
  • In our estimate the Chayanda field which feeds the Power of Siberia pipeline was the main source of additional output (up 17 mn cu m/d to 48 mn cu m/d). Outside East Siberia the gas production was only marginally lower (down 1.4mn cu m/d to 1,480 mn cu m/d). This might be close to Gazprom production capacity which is around 1,500 mn cu m/d.
  • Gazprom deliveries to domestic consumers in January were up 3.2% YoY to 35.4 bcm (1,144 mn cu m/d). The pace of growth in domestic demand continues to slow down YoY. We expect Gazprom deliveries to Russian customers to flatten out YoY in the remainder of winter, 
  • In January Gazprom export to Europe, Turkey and China fell 41% YoY to 11.4 bcm (368 mn cu m/d). Gas export was also down 16% MoM (compared to December last year).
  • There are signs that gas export to Europe might start to recover in the coming months. Gazprom doubled transit via Ukraine on February 1. We also believe that Gazprom would need to restore gas export to Europe to meet export target for this year.
  • Our modelling of Gazprom gas balance in January indicates that the company reduced withdrawal from Russian and European gas storage by 6.5 bcm (210 mn cu m/d) YoY, to offset for a reduction in export to Europe and Turkey (down 8.4 bcm or  273 mn cu m/d YoY).
  • This means that Gazprom gas storage was around 52 bcm as of end January, up 14 bcm YoY and 15% above 3-year average. At the end of the heating season in Russia (end March), Gazprom gas storage might be as high as 38 bcm, up 23 bcm YoY. The surplus storage could be used to supply additional volumes to Europe in the coming months, in our view.
Gazprom_Jan22-stats_1Feb22_FINALDownload

Russian-origin gas price to all export markets at $503 in November, export to Europe drops by 29% YoY

  • The weighted-average price of Russian-origin gas to Europe, Turkey and the Former Soviet Union (FSU) was $503 per 1,000 cubic meters (mcm) in November, compared to our forecast of $511/mcm. This is based on the Russian customs data, released on January 14. It does not include sales to China.
  • Russian customs report the total value of Russian-origin gas shipped across the border. We work out average prices paid for Russian gas by customers in the FSU, Europe and Turkey. 
  • We estimate that Russian gas price to Europe only (excluding FSU, Turkey and ESP sales) was $668/mcm in November. This is at a 39% discount to the average price of TTF November futures of $1,112/mcm.
  • Based on our pricing model, the weighted average price of Russian-origin gas to all destinations (Europe, Turkey and the Former Soviet Union) in December was $580/mcm. The Russian gas price to Europe only (excluding FSU, Turkey and ESP sales) is estimated at $855/mcm, at a 14% discount to the average price of December TTF futures ($1,001/mcm) and 38% discount to TTF average spot price for December. 
  • We estimate that Russian gas export to FSU, Europe, Turkey and China was 16.08 bcm in November 2021, down 22% YoY. This is based on various data points released by Russian customs and Gazprom. Detailed data for November with a breakdown of gas export by country is yet to be published by the Russian customs. However, the preliminary numbers indicate that Russian-origin gas export to Europe was down 29% YoY in November.
Gas-price_Nov21_customs_SHORT_14Jan22_FINALDownload