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Gazprom Export's ESP gas sales hit all-time high Thu at 229 mil cu m

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Gazprom Export's ESP gas sales hit all-time high Thu at 229 mil cu m

Highlights

Latest auction sees biggest volumes sold on ESP by far

Record sales despite well-supplied European gas market

Total Russian gas volumes sold on ESP now 7.74 Bcm

London — Russian gas sales on Gazprom Export's Electronic Sales Platform (ESP) on Thursday surged past the previous daily sales record with a total of 229 million cu m sold.

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The previous highest sales in an ESP auction was 197 million cu m on May 28.

Thursday's sales were almost four times the July average of 60 million cu m/d, further evidence that Gazprom is offering significant volumes on the ESP to offset any lower nominations from its customers with long-term contracts as it looks to retain European market share.

The 229 million cu m sold Thursday is about half the average daily flows of total Russian gas to Europe last month of around 464 million cu m.

The record sales come as European gas prices have fallen to 10-year lows on ample supplies of pipeline gas, strong LNG deliveries and robust storage stocks.

Gazprom Export has used the ESP to sell Russian gas outside of its traditional long-term contract model and to top up sales to European customers, including new clients without long-term agreements.

Gazprom Export CEO Elena Burmistrova said in late June the company was "comfortable" with the volumes being sold on the ESP, adding the company was "not intending" to reduce volumes offered on the platform.

The extra Russian volumes have played a part in ensuring Europe is well supplied with gas this year, helping to keep a lid on prices.

NORD STREAM WORK

Gazprom Export may have been encouraged to offer more ESP gas on Thursday after a slight recovery in the TTF day-ahead price this week to $3.43/MMBtu, S&P Global Platts Analytics said, putting it well above the estimated short-run marginal cost of Russian production and transportation to Europe of $2.80/MMBtu.

ESP volumes could also be curtailed in the second half of July when the 55 Bcm/year Nord Stream pipeline is expected to undergo its two-week annual maintenance.

"Gazprom Export is seeking to push as much volume on the market as possible ahead of its maintenance works in the second part of July," Platts Analytics gas analyst Ornela Figurinaite said. "Gazprom will also be aware of the risk of even lower prices in August."

Platts Analytics expects Gazprom Export to stick to its strategy of using the ESP to keep European gas supplies high.

"We expect the ESP to constitute a significant portion of Russian volumes to Northwest Europe for the remainder of the summer as Gazprom continues to take volume over price," Figurinaite said.

BALANCE-OF-MONTH SALE

Large volumes were sold Thursday for delivery in August and September across Germany (78 million cu m), Slovakia (49 million cu m), the Czech Republic (11 million cu m) and Austria (6 million cu m).

There was also a huge 60 million cu m sale for delivery to the German Gaspool hub for July balance-of-month.

Day-ahead sales were restricted to 24 million cu m across six delivery points.

The average sales price from the auctions that have taken place so far in July is Eur11.443/MWh, according to an update on Gazprom Export's website Friday, down from an earlier July average of Eur11.749/MWh.

The latest July average is a Eur0.32/MWh premium to the average month-ahead price of Eur11.12/MWh in June on the German NCG hub, according to S&P Global Platts price assessments.

The average June sales price on the ESP ended up at Eur12.02/MWh, a significant discount to the NCG month-ahead average price in May of Eur13.86/MWh.

In all, gas sales on the ESP have reached 7.74 Bcm since the first sale took place on September 20.

Gazprom Export has sold gas to more than 20 customers since it began the ESP auctions, including new clients that do not have long-term contracts with the Russian gas group.

Gazprom Export's ESP sales in July (million cu m)

Gaspool NCG VTP Austria Olbernhau VTP Slovakia TTF Total Short-term* Long-term**
01-Jul 11.5 6.9 2.9 14.8 0.7 1.6 38.4 25.5 12.9
02-Jul 23.6 6.8 0.9 5.4 23.0 1.6 61.3 26.2 35.1
03-Jul 31.0 20.7 1.6 14.3 13.0 1.6 82.2 17.3 64.9
04-Jul 121.6 26.7 12.2 15.8 50.6 1.6 228.5 83.8 144.7
Total 187.7 61.1 17.6 50.3 87.3 6.4 410.4 152.8 257.6

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

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

-- Edited by James Burgess, newsdesk@spglobal.com