Gazprom Daily Output Keeps Growing Amid Falling Exports To EU
Russia's Gazprom has been reducing supplies to Europe for months amid the region’s support for Ukraine.
(Bloomberg) -- Gazprom PJSC’s daily natural gas output rose in the first half of September, on track for a second monthly gain, as exports to key European markets continued to fall and flows to China increased.
Traders and policy makers are closely monitoring production and exports of Russia’s gas giant, with European countries racing to prepare for the heating season at a time when prices for the fuel are more than seven times higher than the seasonal average.
Gazprom, which historically accounted for a third of all gas consumed in Europe, has been reducing supplies to the continent for months amid the region’s support for Ukraine. The latest blow for European gas market came from the Nord Stream shutdown earlier this month with no clear signs of when flows will resume.
The Russian producer pumped 847 million cubic of meters a day in Sept. 1-15, up 2.1% from August, according to Bloomberg calculations based on data published Thursday. So far this year, production reached 300.8 billion cubic meters, down almost 16% from a year ago.
Due to the geology of its major fields, Gazprom can adjust production without long-term damage to its wells. Historically, the producer has been able to rapidly ramp up output even after months of decline by deploying spare capacity in the event of higher demand for the fuel.
Gazprom exported 173 million cubic meters a day in the first half of the month to countries outside the former Soviet Union, down 22% from August, Bloomberg calculations show. Since the start of the year, deliveries to the company’s main foreign clients have reached 84.8 billion cubic meters, falling almost 39% from a year ago.
Almost all major gas-pipeline routes to Europe are halted, with flows via Ukraine remaining capped and supplies to Hungary and Serbia going through one leg of the TurkStream pipeline that runs from Russia to Turkey. Gazprom’s total exports to Europe equates to some 80 million cubic meters a day, or a quarter of its deliveries at the end of February, when Russia invaded Ukraine.
Even though gas inventories in key European markets are nearly full, this “can’t guarantee” a safe heating season for the continent, Gazprom said in the statement. The current gas storage level in Germany is equivalent to two months of winter gas consumption for the nation, according to Gazprom.
Flows to China via the Power of Siberia link continue to rise with daily deliveries “regularly” exceeding contracted volumes, according to the statement. The new daily supply record was set on Sept. 10, according to Gazprom. Exports to China are set to increase to some 15 billion-16 billion cubic meters this year, up from 10.4 billion cubic meters in 2021.
Gazprom supplies fuel to China from its fields in east Siberia, which aren’t linked to its pipelines delivering gas to the EU.
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