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Gazprom gas exports to Europe in May up over 10% year-on-year to 13.75 Bcm

Highlights

Deliveries of Russian gas to both Europe and Ukraine rose sharply in May as the gas price dispute between Russia and Ukraine persists, raising concerns over possible interruptions in supplies in June.

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Deliveries to Europe rose more than 10% year-on-year to 13.75 billion cubic meters of natural gas in May, Gazprom's CEO Alexei Miller said late Tuesday.

"Gazprom continues to increase sales of gas to its clients in Europe even when it is compared to record supplies last year," he said, as quoted by Gazprom's press office.


In the first five months of the year, Gazprom's supplies of natural gas to European markets, including Turkey, grew 5%, Miller said, giving no absolute figures.

"That the increase came as gas production in Europe as well as supplies from other sources continue to decline," he said.

Another factor that likely sparked the increase in gas purchases is a looming risk of possible disruptions in gas transit via Ukraine as Russia has warned it could switch to prepayment supplies to Ukraine from June 9 if Kiev fails to pay for gas supplied in late 2013 and in April-May.

This means Gazprom would stop supplies to Ukraine if it receives no payment for June deliveries. As a result, Ukraine may start taking for its own needs transiting gas destined for Europe as happened during gas price disputes between Moscow and Kiev in 2006 and 2009.

GAS OFFTAKING

Meanwhile, Ukraine also took a record gas volumes of 3.529 Bcm in May, to replenish its gas stocks in anticipation of possible cuts in gas deliveries in June.

"This is a record volume, especially for this season," Gazprom's deputy CEO Alexander Medvedev told reporters at a briefing Tuesday.

Ukraine has increased its gas requests in May and Gazprom was meeting them despite uncertainty over payments for gas already delivered, he said.

In the four week from May 2 through May 30, Ukraine injected about 3.24 Bcm of gas into its underground storage facilities, according to Naftogaz Ukrayiny, the national energy company.

Gazprom's conservative forecast envisages gas exports to Europe and Turkey to total 158.4 Bcm in 2014, down 1.9% year-on-year from 161.5 Bcm in 2013.

But the actual total could be higher, depending on weather conditions, Gazprom's Medvedev said Tuesday.

In 2013, Gazprom raised its gas exports to Europe by 16% -- despite lower overall demand in the region -- because of disruption to Libyan supplies to Italy and lower Norwegian exports to northern Europe, as well as declining production within the EU itself.

--Nadia Rodova, nadia.rodova@platts.com
--Edited by Jeremy Lovell, jeremy.lovell@platts.com

Similar stories appear in European Gas Daily See more information at http://www.platts.com/Products/europeangasdaily