Gazprom warms Europe, sets new records

Amid the cold snap in Europe and falling gas supplies from Norway, Gazprom has been setting new export records in early June. If the trend continues, the company might beat its own annual forecast, sending Europe 153 billion tons — 1 percent above the planned 151.8 billion. However, rising exports are offset by falling prices and retroactive payments nearing $1 billion.

Gazprom claims its daily exports have reached some 466 million cubic meters (16.4 billion cubic feet) — the highest figure in the last five years. Since the beginning of June, the company has exported 29 percent more gas than the same period last year, Gazprom reported.

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The key reason for this impressive rise is the cold snap that hit Europe in late May, combined with the planned repairs for Norway's gas suppliers. Over the first five months, Gazprom's exports to Europe have jumped 6.4 percent, to 66.1 billion cubic meters (bcm).

At the same time, according to the Central Dispatching Department of the Fuel Energy Complex, Gazprom's commercial gas exports were a bit lower (446.5 million cubic meters) as of June 4. Even so, this is a rather high level, comparable to the figures reached in early April before the end of the heating season.

According to the Interfax estimates, current requests from importers, extrapolated over the rest of the month, allow Gazprom to anticipate a 30 percent rise in exports in June (up to 12.9 bcm) and a 9.8 percent increase in the first half of the year (to 79.5 bcm). If the company maintains its export rates in the second half of the year, the annual figure might reach 153 bcm.

Gazprom itself expects its 2013 gas sales to Europe to jump 9.4 percent (to 151.8 bcm), while forecasting a 15.7 percent increase (to 74.5 bcm) in supplies to the CIS countries and the Baltic states.

In 2012, the company cut its gas exports by 8 percent, down from 221.1 bcm in2011 to 203.2 bcm. Exports to Europe declined 7.5 percent last year, down to 138.8 bcm. Gas exports to Western Europe were down 5.5 percent last year (105.8 bcm), while supplies to Central Europe sank 13 percent (32.9 bcm). At the same time, exports to the CIS and Baltic countries in 2012 reached only 64.4 bcm — 9.4 percent below the 2011 level.

The average price of gas supplies to Europe last year stood at $402 per 1,000 cubic meters and $308 for supplies to the CIS and Baltic states. Gazprom expects the average price of Russian gas exports to Europe to drop by 5.5 percent to 8 percent in 2013: to between $370 and $380 per 1,000 cubic meters.

Owing to the falling prices and their retrospective revision, Gazprom will have to return its customers the difference between the contract and the revised prices. According to Gazprom CEO Alexander Medvedev, the company's retroactive obligations will reach $800 million to $900 million.

First published in Russian in Kommersant Daily.

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