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Russia saw a surge of low-price exports this summer

Gazprom's sales dipped in the first quarter of this year, but was followed by a surge of lower-priced exports

Russia's gas export monopoly Gazprom saw its sales volumes dip in the first quarter of this year, followed by a surge of lower-priced exports in the summer.

In the relatively mild Q1 in its home market, customers in the Russian Federation took 5%, or 4.2bn cm, less than in the same quarter of last year.

But European sales volumes (excluding the former Soviet Union) were down by 16.2%, from 46.7bn cm to 39.1bn cm while sales to the former Soviet Union (excluding Russia) were down by 21%, or 3.4bn cm.

A portion of Gazprom's European exports are still linked to the oil price with a lag of six months or more; and the fall in oil last summer would have started to feed through into gas prices from January. But buyers have the flexibility to push the delivery of non-essential volumes back from the first quarter until later in the year, to capture even bigger cost savings.

Last month, for example, the state-controlled company's exports to Europe rose 22% year-on-year to a record 14.2bn cm, although gas sold at gas hubs will have commanded a relatively low price. "Depleted storage levels and lower gas pricing for Gazprom's gas ensured increased offtake from European customers," a company representative told Petroleum Economist. And a look at Gas Storage Europe's data shows a faster rate of withdrawals in Q1 2015 than in Q1 2014 as buyers used up inventory and delayed imports.

"All in all, Gazprom's Q1 2015 International Financial Reporting Standards results showed Gazprom's ability to deliver a solid performance in a complex economic environment. Operations of the group have been affected by the prevailing price of crude oil, both in domestic and international oil markets," the spokesperson said.

However, a weak rouble disguised the drop, as net receipts from sales to Europe rose 12%, from roubles 484bn to roubles 543bn.

Gazprom's operating expenses rose in Q1 2015, owing to a higher cost of gas purchased from third parties abroad and to higher mineral extraction tax and property tax. It also spent roubles 16.4bn ($255m) on retroactive gas price adjustments this year, but reported nothing equivalent for last year Its operating profit was marginally down, from roubles 472.8bn to roubles 458.7bn.
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