MOSCOW, February 1. /TASS/. Exports to Europe by Gazprom plunged to the level of the Soviet period in January due to more attractive gas prices on the spot market, BCS World of Investment said in a report. Meanwhile, the company’s contract prices will become more competitive starting February 1, which is why BCS is keeping its outlook on Gazprom exports to Europe for 2023 at 65 bln cubic meters.
"In January, Gazprom exports to Europe fell to a level not seen since the Soviet period. However, the reason is not Gazprom’s undersupply of gas, but more likely the fact that purchasers prefer lower spot prices, rather than Gazprom’s contract prices," the report said.
In particular, gas transit via Ukraine lost 45% compared with December 2022 to 24 mln cubic meters per day, BCS analysts said, adding that the decrease was mainly due to the fact that two out of the four types of Gazprom contracts in January were not profitable for buyers. This happens because there is a time lag from 1 to 7 months, which is why when prices rise, Gazprom’s gas is highly demanded. However, when prices fall, purchasers move to the spot market with more attractive prices, "expecting an inevitable adjustment of Gazprom’s contract prices," market watchers explained.
Gazprom supplies to Europe are projected to substantially increase once contracted prices become equal to spot ones, BCS analysts noted, adding that this is expected as early as in February when contract prices for the upcoming month decline and become more competitive compared with spot ones. Meanwhile, quarterly contracts will be revised on April 1. At the same time, oil-pegged contracts still remain attractive.
Russia’s gas producer said earlier that its supplies to non-CIS countries (including China) totaled 100.9 bln cubic meters of gas in 2022, down 45.5% compared with 2021. This brings the company’s gas exports in 2022 to their lowest level this century, according to yearlong statistics. That said, Russia exported a record 15.5 bln cubic meters of gas to China via the Power of Siberia gas pipeline in 2022, Deputy Prime Minister Alexander Novak said earlier.