Gazprom's European Sales Slide In YTD
Russia’s Gazprom saw exports to countries outside the former Soviet Union slump by 2.5% yr/yr from January 1 to October 15, landing at 152.6bn m3, its CEO Alexei Miller said in a meeting with Russian prime minster Dmitry Medvedev on October 18.
Russian piped gas sales in Europe have floundered this year in part because of rising competition from LNG. Despite the decline, Miller noted that export volumes in the year up to October 15 were still up 2.6% compared with the same period in 2017. Output grew by 0.9%, arriving at 389bn m3, he said.
Miller also took the opportunity to reiterate Russia’s position regarding the future transit of gas through Ukraine. Russia and Ukraine must first resolve all legal disputes regarding gas supply and transit, he said, before a new transit contract can be agreed to replace the one expiring at the end of the year. Naftogaz is currently seeking billions of dollars of compensation from Gazprom for contract violations and has sought the arrest of the Russian firm’s assets in Europe to pressure it to settle a $2.5bn Stockholm arbitration award.
Russia also needs to know how much gas Ukraine intends to buy from Gazprom, Miller explained. Ukraine has not bought any gas directly from Russia since late 2015, instead importing supplies from its EU neighbours. Direct purchases from Russia would reduce prices for end consumers in Ukraine by 20%, Miller claimed.
Lastly, the CEO said that unless Ukraine managed to complete reforms bringing its gas legislation in line with EU standards by January 1, the only option would be for Moscow and Kiev to extend their existing contract. These reforms include the creation of an independent transmission system operator and an independent tariff regulator.