MOSCOW - It could be said a "Gas OPEC" was born on Sept. 3, the day Gazprom reduced gas contracts to non-CIS countries to a contract minimum after full-scale reverse supplies to Ukraine from Slovakia began.
Gazprom, albeit on its own, is trying to influence Ukraine’s “friends” in Europe by depriving reverse supplies of their physical source of gas, which is surplus Russian gas. It hasn’t had much success as of yet – reverse supplies from Slovakia are still at their peak, although spot prices at the Baumgarten hub in Austria, the closest to Ukraine, rose 15 percent above prices at other European hubs. Meanwhile the gas market’s main protagonist, the winter cold, has yet to enter the game.
Export
Although European countries have been complaining that their increasing nominations are not being met in full, they have quite enough gas. They continue to pump it into their own storage facilities, breaking new records in the process: storage facilities in the region are 91.8 percent full on average, and Poland has filled its storage facilities to 99.64 percent. France, where gas has risen above $400 per thousand cubic meters, is the only country to have dipped into its winter pouch so far.
Russian gas exports to non-CIS countries fell 18 percent or by 2.5 bcm in September to 10.82 bcm, according to calculations by Interfax, based on the latest gas industry data. This was the biggest drop since November 2012.
In defiance of the seasonal trend, gas exports are falling slowly but surely, from day to day. In the second week of September compared to the first, these supplies fell 1.1 percent, in the third week compared with the second week they fell 1.3 percent and in the fourth week compared with the third they fell 1.7 percent.
But the picture might not have looked any different even if Gazprom had met the requests of its European clients in full, as European underground storage facilities were very well stocked and exports had fallen 14 percent in the two previous months. So the special “operation” to halt reverse supplies to Ukraine might just have been a public screen for the company’s objectively slack exports over the past mild winter.
But for all the unusual nature of the present situation with exports, it shouldn’t be forgotten that the current drop is largely the effect of the high base last year (13.058 bcm), when European storage facilities were emptied following a long winter. As a result, September 2014 exports are higher than September 2012 exports (10.7 bcm) or 2011 (9.4 bcm).
In January-September 2014, Gazprom exported 114.8 bcm, which is 3.5 percent or 4.2 bcm less than in the same period of last year.
Storage
The official reason minimizing exports is that Gazprom was concentrating on pumping gas into storage in Russia itself. Indeed, in the last week of September, Gazprom has been pumping gas into storage at a rate of 150 million cubic meters a day, roughly double that for a year previously. However Gazprom is only producing 1.05 bcm a day, 350 mcm less.
Russian storage facilities now contain 68.7 bcm of active gas, 1 bcm more than a year ago.
Gazprom continues to pump gas into storage outside Russia very actively, too. Last winter, 3.7 bcm were withdrawn from storage facilities not just in non-CIS countries but in the Baltic States and Belarus also, but 4.1 bcm had been injected as of the end of this September. In all, Gazprom plans to pump 5 bcm into storage facilities in Europe this season.
Reports gave said Gazprom might create additional stocks in Austrian and Hungarian storage facilities ahead of the coming winter.
Production
As supplies to Ukraine have come to an end and exports to Europe have decreased, gas production by Gazprom have consequently fallen by 22 percent (30.3 bcm) in September. In January-September, the company has shown an 8 percent (22 bcm) drop in production to 318 bcm.
Overall gas production in Russia in September has fallen 14 percent to 45.86 bcm and in the 9M it fell 4.7 percent to 464 bcm.
