Analysis: Russian gas supplies to Europe edge up in December

London — Russian gas supplies to Europe edged up further in December, S&P Global Platts Analytics data showed Friday, with total exports reaching their highest level since May.

Pipeline flows to all of Europe (excluding the countries of the former Soviet Union) through the Nord Stream pipeline, the Yamal-Europe corridor and via Ukraine totaled 15.34 Bcm in December, or an average of 495 million cu m/d, according to the data.

That was up on the 15.25 Bcm that flowed out of Russia in November and was also higher than Russian exports to Europe in December 2018 of 14.74 Bcm, the data showed.

Russian flows to Europe in 2019 peaked in May, with exports of 15.37 Bcm, but then were restricted through the summer on pipeline maintenance, low demand caused by average summer temperatures and already robust storage stocks.

But with the start of winter -- and with storage holders unwilling to send out their stocks in the hope of higher prices later in the winter -- Russian gas flows picked up, especially into Central and Eastern Europe.

Russian contracted gas buyers were likely nominating imports at higher take-or-pay levels through December instead of taking from storage or buying gas at the hubs.

That has meant Gazprom Export had less gas to offer on its Electronic Sales Platform, with ESP sales for delivery in December still relatively subdued at 1.54 Bcm.

December-delivered gas sold on the ESP made up 10% of the total volume supplied by Russia, the same as in November.

DECEMBER FLOWS

Flows via the Nord Stream pipeline to Germany in December remained close to capacity with a total of 4.88 Bcm delivered for an average 157 million cu m/d.

Gas flows through the Yamal-Europe corridor via Belarus into Poland in December were also up slightly on the month, with volumes totaling 3.18 Bcm.

Flows through Ukraine dipped slightly to 7.08 Bcm, down from 7.24 Bcm in November, but were still high compared with much of 2019.

Supplies via Velke Kapusany dropped back below 5 Bcm to 4.78 Bcm.

Russia also supplied 212 million cu m of gas to Finland via the Imatra interconnection point in December, according to data from European transmission system operators' body Entsog.

Gazprom also supplies gas via the Blue Stream pipeline directly to Turkey under the Black Sea, but no flow data is available.

2019 FLOWS

Total flows via the three main corridors -- with no Blue Stream flows included -- were 168.9 Bcm last year, according to the Platts Analytics' data.

That is up slightly on the 168.3 Bcm exported in 2018.

Gazprom CEO Alexei Miller at the end of 2019 said the company's sales to Europe and Turkey were expected to be 198.9 Bcm.

That includes sales from storage, flows via Blue Stream and is according to standard Russian gas measurements.

When converted to standard European gas units, the sales of 198.9 Bcm are 182.2 Bcm, according to S&P Global Platts calculations.

With European gas storage sites filled to capacity ahead of the start of the current winter, Russian flows in 2020 are expected to drop.

Platts Analytics expects a 13% year-on-year decline as Gazprom cuts the use of the Ukrainian transit corridor as per the terms of its new five-year deal with Ukraine.

"Higher-cost imports via Ukraine are priced out by US LNG before Nord Stream 2 is able to step in," it said.

Nord Stream 2 is now expected to come online only by the end of 2020 after US sanctions were imposed on companies involved in its construction.

Still, Platts Analytics sees Ukraine as the marginal route for Russian gas into Europe.

--Stuart Elliott, stuart.elliott@spglobal.com

--Edited by Alisdair Bowles, alisdair.bowles@spglobal.com

-- Edited by Alisdair Bowles, newsdesk@spglobal.com