Russian gas sales soar on Gazprom Export's ESP since start of 2020

London — Russian gas sales on Gazprom Export's Electronic Sales Platform (ESP) have soared since the start of 2020, with more gas sold across the five auctions held so far this month than in the whole of December.

Sales have averaged 175 million cu m/d so far in January as Gazprom looks to offer out significant volumes to make up for the small sales last month, which were affected by uncertainty over the future of Russian gas transit via Ukraine.

Gazprom and Ukraine's Naftogaz signed a new five-year Ukrainian gas transit agreement on December 30, easing concerns of significant disruption to flows, with the Russian company agreeing totransit 65 Bcm via Ukraine in 2020.

Sales on the ESP so far in January are the highest since early July 2019, when Gazprom Export sold an average of 250 million cu m/d in a 10-day period ahead of the annual shutdown of the Nord Stream gas pipeline.

Total volumes sold so far this year are 877 million cu m -- more than the total sales in December of 789 million cu m.

Gazprom Export only updated the data for the auctions held in January on Thursday following theend of the Russian holiday season.

STORAGE SURPLUS

Gazprom also built up more than 11 Bcm of gas in storage in Europe ahead of the end of 2019, more than double the usual volumes it holds in sites outside of Russia.

The significant sales on the ESP in January suggest Gazprom is looking to continue to focus on retaining market share in Europe despite very low gas prices.

"With the transit interruption risk having disappeared, Gazprom is able to rely more on its accumulated storage stocks in Europe as well as plenty of available transport capacity, which allows it to resume its 'volume over price' strategy," analyst Ornela Figurinaite from S&P Global Platts Analytics said.

"We are expecting ESP sales to stay high as Gazprom continues to ramp up flows via Velke Kapusany, as prices remain well above short-run marginal costs and flows remain below the averages needed to meet the 65 Bcm of capacity booked through Ukraine," Figurinaite said.

DELIVERY POINTS, PERIODS

Across the five auctions held so far in January, sales have been largely divided equally between volumes for delivery this month and delivery in February.

Small volumes have also been sold for delivery in March and in Summer 2020 (April-September).

Gas was also sold for within-day delivery for the first time since the ESP began operations in September 2018.

A total of 15 million cu m was sold for within-day delivery to the Arnoldstein interconnection point between Austria and Italy in the past two auctions held Tuesday and Wednesday.

The main delivery point for ESP sales so far in January is the German Gaspool hub (379 million cu m), followed by the Dutch TTF hub (134 million cu m), the Olbernhau interconnection point between Germany and the Czech Republic (120 million cu m) and the Austrian virtual trading point (98 million cu m).

Volumes have also been sold for delivery to the German NCG hub, the Slovakian VTP, the Austrianhub at Baumgarten and the Beregovo interconnection point between Ukraine and Hungary.

Gazprom Export launched the ESP to sell gas outside of its traditional long-term contract modelin September 2018 and has gradually increased the number of delivery points and timeframes.

In all, gas sales on the ESP now total 17.38 Bcm since the first sale took place.

Gazprom Export also publishes the average price of sales on the platform, though it has yet to give a price for January.

GAZPROM EXPORT'S ESP SALES IN JANUARY (MILLION CU M)

* Day-ahead, weekend, balance-of-month; ** Month-ahead, two month-ahead, three-month ahead, quarters ahead, seasons ahead.

Source: Gazprom Export

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

-- Edited by Jonathan Fox, jonathan.fox@spglobal.com