- 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 Group gas production was up 62 billion cubic meters (bcm) to 514.8 bcm in 2021. These additional volumes have mostly stayed in Russia.
- Gazprom sales to domestic customers went up 31.9 bcm YoY to 257 bcm. Export to Europe, Turkey and China was up 5.8 bcm YoY to 185 bcm. Injection into Russian gas storage was up an estimated 28 bcm YoY to 61 bcm in 2021. Russian gas storage was 83% full as of 29 December, at 60.2 bcm.
- In December, Gazprom production might have been close to capacity (47.2 bcm or 1,523 mn cubic meters per day). As in previous three months, the company was sending more gas to domestic consumers and much less gas to export markets compared to last year.
- There was a significant YoY drop in gas export to Europe (including Turkey) in December (down 5.7 bcm or 185 mn cu m/d). This was offset a reduction in Russian storage withdrawal of 6.9 bcm (225 mn cu m/d) vs last year.
- Over the next three months we assume that Gazprom output will remain at seasonally high level, domestic demand will be at around three-year average and export will remain tagged to long-term contracts. This would mean that Russian gas storage level might be 34 bcm full at the end of March this year, up 19 bcm compared to 2021.
- These volumes could be used for additional export, or, in its absence, it could lead to a drop in Gazprom output and sales in 2022.
- See the report for charts and analysis.
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