Gazprom sees record 2016 gas exports to Europe
ST PETERSBURG - Russia's Gazprom plans to export a record 165 Bcm of gas to Europe this year, according to the company's deputy CEO, Alexander Medvedev.
Gazprom generates more than a half of its revenue in Europe, and falling gas prices have made its gas more attractive to European consumers. It has also tweaked long-term deals with European clients, who have become more demanding due to rival sources of fuel, such as seaborne LNG.
"We are going for a record," Medvedev said about expected gas supplies to Europe and Turkey this year.
Gazprom supplied about 159 Bcm of gas to Europe in 2015, or about one-third of the region's needs.
Medvedev did not give an explanation for the expected record. Last week, a Gazprom executive said it planned to produce 452.5 Bcm of natural gas in 2016, up from 418.5 Bcm last year.
Despite Gazprom's attempts to raise its exposure to the lucrative EU market, some European countries have been trying to wean themselves off of their dependence on energy supplies from Russia.
Medvedev said the average gas price for the year was expected to be $167/Mcm-$171/Mcm.
That price is broadly in line with average levels at Europe's main freely-traded gas hubs in Britain and the Netherlands, showing how Gazprom has sweetened its sales pitch to encourage consumption by customers, analysts said.
Gazprom's prices have typically been higher than the average level at European hubs.
A wave of competing supplies from LNG export plants in the US threatens to undercut Russia's dominant share of European gas markets, which currently stands at 31%.
Analysts have predicted that Gazprom may try to sweeten its terms and pump more supply to Europe to hold onto that market share.
Medvedev also said he was against breaking up Gazprom's monopoly on gas exports to Europe via pipelines, because it would harm Russia's export revenues.
Gazprom has faced increased competition in Russia from Novatek and Rosneft, with its pricing policy constrained by government-imposed tariffs.
Both companies have been actively pushing the government to allow them to export gas to Europe via pipelines.
(Reporting by Vladimir Soldatkin; additional reporting by Nerijus Adomaitis and Oleg Vukmanovic; editing by Katya Golubkova and David Clarke)
Comments