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Gazprom Export sees 200 Bcm natural gas sales to Europe as 'new reality': Burmistrova

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Gazprom Export sees 200 Bcm natural gas sales to Europe as 'new reality': Burmistrova

Highlights

Supply not expected to decline in coming years

LNG 'not in interest' of European supply security: OMV

Some 20% of Nord Stream 2 pipeline now laid

Vienna — Russia's Gazprom Export believes that the record high gas sales of 200 Bcm in Europe and Turkey last year represented a "new reality" for Russian gas exports.

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Speaking Tuesday at the European Gas Conference in Vienna, CEO Elena Burmistrova also said she expected gas sales to remain at current levels over the next few years.

"We hit a record high of more than 200 Bcm in 2018," she said. "This figure shows a new reality -- this is the trend. I do not think we are going to decline in the next coming years."

Gazprom's sales figures are for Europe and Turkey minus the countries of the former Soviet Union, and are measured under Russian standard conditions.

So, 200 Bcm under Russian standard conditions is the equivalent of 183 Bcm when converted to standard European gas units, according to S&P Global Platts calculations.

Burmistrova said Europe would become increasingly import dependent and that Russia was in a good position to fill the growing import gap.

Even with stable demand, additional imports would be needed because of the fall in domestic European gas output.

She said LNG demand in Asia would remain competitive versus Europe. "Asian markets will maintain their attractive nature," she said.

OMV BACKS RUSSIA OVER LNG

Manfred Leitner, downstream head at Austria's OMV, agreed that pipeline gas was the only secure way of sourcing the additional gas imports for Europe.

"LNG is not in the interests of security of supply for Europe," Leitner said, adding it was more expensive, less reliable and less CO2 efficient than pipeline gas.

He stressed the importance of Russian supplies to Europe, and called on the European Commission to do "whatever is necessary to maintain a stable relationship" with Russia.

Leitner said the Nord Stream 2 pipeline, planned to bring 55 Bcm/year of Russian gas to Germany, was one way to make sure of meeting future European gas demand.

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OMV, he said, was convinced there was no alternative to Nord Stream 2 for making sure European gas demand was met in the future.

Leitner said he did not believe all EU member states were following the interests of the EU as a whole with regard to Nord Stream 2, and that it was in the national interest of some countries to oppose it for "different political reasons".

Many countries in eastern Europe oppose Nord Stream 2 because they believe it increases Europe's reliance on one route and one source of gas.

EC VIEW

Florian Ermacora, head of wholesale markets for the EC directorate for the internal energy market, said he welcomed Leitner's remarks around Nord Stream 2.

"I was happy to hear Mr Leitner saying this should not be a debate at national level," Ermacora said. "This was music to our ears."

It was logical that Nord Stream 2 and other existing pipelines "cannot be regulated at the national level," Ermacora said.

He said that proposed amendments to European directives on offshore pipelines were not targeting Nord Stream 2 directly -- they were not saying that Nord Stream 2 was not wanted -- rather that it was important to look at the project from a regulatory point of view.

Paul Corcoran, CFO of Nord Stream 2, told the conference that more than 500 kilometers of Nord Stream 2 had now been laid -- or around 20% of the total 2,400 km of pipeline to be laid (two lines of some 1,200 km each).

He said the German section of the pipeline was completed, and work continued in Swedish and Finnish waters, while the Danish permit to lay pipeline was expected "later this year".

He said the first line of Nord Stream 2 was on track to be completed in November, and the second in December.

Corcoran also said the additional import gap of 120 Bcm by 2035 estimated when Nord Stream 2 was conceived "is probably higher now".

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

-- Edited by Daniel Lalor, newsdesk@spglobal.com