Gazprom's price for Europe and Turkey mixed in June
London, 5 July (Argus) — Gazprom's average price for its gas sales to Europe, excluding the Baltic states, and Turkey was slightly lower in June than May when denominated in euros.
The price to these destinations rose to $185.50/'000m³ from $185/'000m³, Gazprom said. But the euro strengthened against the dollar, reducing the average price to €15.61/MWh from €15.81/MWh.
Gazprom's average price for Europe, excluding the Baltic states, and Turkey dropped in euro terms despite oil-indexed prices rising. It has remained much closer to the TTF front-month index than crude-linked prices this year. The Russian firm has increased the share of hub-indexation and TTF-linked corridors in recent years.
And Gazprom's sales to the same destinations remained strong, rising to 14.4bn m³ from 13.4bn m³ a year earlier. Sales in January-June of 94.2bn m³ were up from just under 85bn m³ a year earlier.
Gazprom chief executive Alexei Miller had said that sales by the export arm rose by 10.5bn m³, which was more than the 9.23bn m³ increase. But Miller's figures would include resales of some central Asian gas to Croatia and Romania, which Gazprom does not include in the sales of 94.2bn m³.
Sales have remained higher than a year earlier this summer despite hub prices dropping well below oil-indexed import costs. Firms with crude-linked contracts may have had less incentive to maintain high nominations.
But Gazprom also sells gas through its London-based marketing and trading arm as well as other trading subsidiaries such as Germany's Wingas and WIEH.
The Russian firm has increased sales to the UK, which includes its deliveries to its marketing and trading arm despite physical delivery taking place in continental Europe.
And other subsidiaries of Gazprom have increased their sales in recent years. Centrex Italia — owned by Gazprombank — raised its sales to 3.31bn m³ in 2016 from 2.39bn m³ a year earlier and just 1.06bn m³ in 2014.
Gazprom plans for 2017 sales to Europe, excluding the Baltic states, and Turkey to exceed its record of 178.3bn m³ in 2016.
The firm may need to maintain high Russian exports to its European trading subsidiaries to keep sales strong in the second half of the year with hub prices below the cost of crude-linked gas.
Gazprom's sales to western Europe bn m³
Gazprom sales by region bn m³
Gazprom sales to Europe and Turkey strong in June bn m³
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TTF and Gazprom prices below oil-index €/MWh