Gazprom makes slow start on boosting gas supplies to Europe

Russian state gasoline group Gazprom has begun to fill a few of its storage amenities in Europe within the first vital signal it’s ready to behave on a promise by President Vladimir Putin to assist assuage the continent’s vitality disaster.

Gazprom on Tuesday stated it had “decided the volumes and routes for transporting the gasoline” to 4 websites in Germany and one in Austria, with out including any additional particulars.

Putin had promised the corporate would this week begin filling a few of its depleted storage websites in Europe after it let volumes of gasoline there fall to unusually low ranges.

The transfer is the primary tentative signal Russia could enhance exports to western Europe as hovering gasoline costs have pushed the area to the brink of a full-blown vitality disaster. Some European lawmakers have blamed the issues on Moscow limiting provides.

Robust demand globally, a drop in wind energy technology and rising consumption of liquefied pure gasoline in Asia have left European customers hoping for assist from Russia, which offers 40 per cent of the continent’s gasoline.

However markets reacted tepidly after it turned clear Russia wouldn’t enhance provide volumes sufficient to stave off worries that even a barely colder winter than anticipated may create gasoline shortages in Europe.

The European benchmark contract was down only one per cent in early afternoon buying and selling on Tuesday to €77.75 per megawatt hour, whereas the UK contract for December supply slipped nearly 3 per cent to £1.97 per therm.

Costs fell additional later within the session after Gazprom booked further pipeline capability by means of Ukraine, permitting it to additional increase exports on Wednesday, though nonetheless by a comparatively small quantity.

“The market should be assuming these bookings proceed to rise,” stated James Huckstepp at S&P International Platts.

Different analysts agreed there was nonetheless cause for warning, with Russian exports to western Europe decrease than final yr.

“It’s a begin, however the volumes delivered [from Gazprom] up to now are underwhelming and never almost sufficient to considerably decrease costs,” stated Tom Marzec-Manser at ICIS, a consultancy.

“On each the Polish and Ukrainian routes Gazprom continues to be delivering under their booked capability — they’re sending greater than the very low ranges in September and October but it surely’s nonetheless nowhere close to corresponding to 2020 or 2019.”

Putin had ordered Gazprom to begin filling its European storage amenities by this week after it completed stocking Russian inventories. However the president has stated any additional gasoline provides must come by way of the controversial Nord Stream 2 pipeline, which bypasses conventional transit routes by way of Ukraine to provide Germany by means of the Baltic Sea.

Moscow has denied claims by some European policymakers that Gazprom was exacerbating the gasoline disaster by limiting export volumes to hurry the pipeline’s regulatory approval, which isn’t anticipated earlier than the tip of the yr on the earliest.

Sergiy Makogon, head of the Fuel Transmission System Operator of Ukraine, stated Gazprom had booked an additional 20m cubic metres a day of pipeline capability by means of Ukraine, taking whole provides to about 110m cubic metres a day. However the enhance in quantity was nowhere close to the extent wanted, he added.

“The determine on the identical time final yr was about 180m cubic metres a day and 2020 was a low gas-demand yr in Europe on account of Covid,” Makogon stated. “Now we have now excessive demand, low storage, highest costs ever, however the volumes are half of what they have been.”

Gazprom has eight European underground storage websites exterior Russia, together with 4 in Germany — Jemgum, Katharina, Rehden and Etzel — and one in Austria, Haidach.

Mitch Jennings, oil and gasoline analyst at Sova Capital, stated knowledge to be launched within the subsequent few days would present whether or not Gazprom was withholding gasoline intentionally by revealing how a lot the state vitality firm had topped up storage.

Information from trade physique Fuel Infrastructure Europe present that as of November 7, storage on the Rehden website in Germany was considerably under historic ranges — solely 9.6 per cent full.

Jennings estimated that filling the Haidach, Jemgum and Katharina websites would require about 9.2bn cubic metres, whereas Rehden wanted nearly 40bn cubic metres. “Clearly Rehden can’t be crammed this yr,” he stated.

Extra reporting by Nastassia Astrasheuskaya in Moscow

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