Gazprom loses European gas market share in 2Q

  • Market: Natural gas
  • 21/08/20

Russian state-controlled Gazprom's share of the European gas market fell on the year in the second quarter, the firm said.

The firm had a 39.2pc share in the EU — excluding the Baltic states — and Turkey, Switzerland, Norway, the UK, Albania, Serbia, North Macedonia and Bosnia and Herzegovina, down from 43.2pc in April-June last year, data from a corporate filing published last week show (see market share graph).

And the proportion of Russian pipeline gas in the supply mix was down more sharply — by 6.7pc — Gazprom said. This suggests Gazprom may have upped sales of LNG or possibly gas from storage. Gazprom started selling LNG to Austria's OMV this year under a 1.2bn m³ contract. It delivered 198mn m³ in the second quarter.

Prompt prices across Europe — with the exception of Italy and Hungary — often held below the TTF front-month index's settlement in April-June, limiting the incentive for quick Russian take under long-term contracts tied to the index. This had largely been the case in the second quarter of 2019, although there had still been an incentive for strong receipts in Austria, Slovakia and Italy (see TTF v prompt graphs).

Overall European consumption was down in April-June from a year earlier, resulting in Gazprom's outright sales falling sharply (see demand graph).

And the European stockbuild fell on the year in the second quarter. Quick injections had helped boost Gazprom's sales in the second quarter of 2019. Some countries, such as Hungary and Romania, built up especially high stocks last summer to prepare for a possible halt to Russian transit through Ukraine this year.

Europe diversifies supply sources

LNG's share of Europe's supply mix rose in the second quarter from a year earlier, displacing Russian pipeline supply.

European regasification fell much less sharply in April-June than Gazprom sales (see LNG vs Gazprom graph).

The US and Qatar increased their European market share by 6.4pc and 2.3pc, respectively, in the second quarter, Gazprom said. Qatar had a 10.9pc share, judging by Gazprom data, while it is not possible to calculate the outright US market share based on the firm's data.

And Algeria — which supplies LNG and pipeline gas — reduced its market share by 2.6pc, Gazprom said.

Algerian pipeline supply is largely priced on an oil-linked basis. And Spain, France, Italy and Greece had little incentive for quick take last quarter, with European prompt prices holding well below oil-linked import costs and reflecting ample access to cheaper LNG and pipeline imports, including — at least at times — from Russia (see Algeria graph).

Weak consumption in northeast Asia stemming from Covid-19 pushed northeast Asian LNG prices to record lows in April-May, drawing uncommitted LNG cargoes to Europe and leaving the region with less scope to absorb Russian and Algerian pipeline gas.

Gazprom appeared to stop offering prompt supply on its online platform from late May, possibly because European prompt prices were at levels where it would no longer be profitable to offer gas for sale. Online sales made for prompt delivery periods on 21 May — the last day on which Gazprom recorded these sales — had a weighted average of €5.21/MWh. And northwest European everyday prices held well below this level for most of the rest of that month (see prompt prices graph).

Northwest Europe's regasification was higher year on year in May, before falling sharply in June, when availability in the Atlantic basin tightened following widespread US cargo turndowns and amid extended maintenance at the Yamal and Hammerfest liquefaction plants.

Weaker regasification lent support to European prompt prices in June, which rose above the TTF front-month index's settlement for the month of €4.84/MWh in several markets and increased the incentive for Russian hub-linked take (see sendout vs hub-linked graph).

And overall demand started to recover in June as lockdowns began to ease, even rising on the year in some of Gazprom's larger markets, including Germany, Italy, France and the Netherlands, driven in part by stronger power-sector gas burn. This may have allowed Gazprom to claw back some market share late in the quarter (see year-on-year demand graph).

Norway's European market share fell by around 0.1pc in the second quarter, judging by Gazprom data. The share of European production fell by 1.6pc.

LNG displacing pipeline gas diversified Europe's supply mix. The Herfindahl-Hirschman index (HHI) — a measure of the size of firms in relation to the industry and an indicator of the amount of competition among them — fell by 17.7pc on the year in April-June, Gazprom said.

Gazprom market share falls pc

2Q everyday prices below TTF front-month index €/MWh

More incentive for Russian take in CEE €/MWh

European demand knocked down on Covid-19 TWh/d

2Q LNG sendout falls less bn m³

Prompt prices dropped sharply €/MWh

Russian and Norwegian flows climb late

Y-on-y demand growth by June except in UK GWh/d

Y-on-y 2Q demand hurts Algeria more TWh

Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News
21/05/24

Australia pauses pro-upstream offshore oil, gas reforms

Australia pauses pro-upstream offshore oil, gas reforms

Perth, 21 May (Argus) — Australia's federal resources minister Madeleine King acknowledges the political situation in the nation's upper house of parliament the Senate prevents any deal to clarify consultation requirements for the nation's offshore oil, gas, carbon capture and storage (CCS) and renewables sectors. The Senate last week passed the Labor party-led federal government's legislation on changes to deductions permitted under the Petroleum Resources Rent Tax (PRRT) and a new fuel efficiency standard for light commercial and passenger vehicles . But the deal struck with the Greens party and two independent senators meant the government withdrew amendments designed to specify which stakeholders must be consulted under law before receiving environmental permits. King blamed the Greens for her government removing the amendments from the agenda. "My disappointment is not for the industry but the community that will remain subject to inadequate and inappropriate consultation requirements for longer," King said on 21 May at the Australian Energy Producers conference in Perth. "The Greens political party and the crossbench independents and others promoted widespread misinformation in relation to the proposal that would ensure the community had the benefit of clarity and certainty in consultation." Environmental lawyers delayed field drilling and pipeline laying for Australian independent Santos' $4.6bn Barossa backfill project from late 2022 until early 2024, citing insufficient consultation with traditional owner groups, in a case ultimately dismissed by the Federal Court of Australia. Changes to offshore laws were promised by the federal government in January with concerns legal tactics could lead to further lawsuits aimed at driving up costs for LNG backfill, offshore wind power projects or CCS. Climate campaigners saw the changes as a vehicle for easing scrutiny on developers and its politicians promised to oppose any changes. But having dealt with the Greens instead of the Liberal-National coalition on legislation for fuel efficiency and the PRRT because of the latter's demands that the approvals process for oil and gas be expedited, Labor is less likely to now receive support for changes to consultation ahead of next year's federal election. The future gas strategy released by the federal government this month said new supplies are urgently needed, as gas-fired power generation will likely replace firming capacity provided by retiring coal-fired power plants. The report also found multiple reasons for Australia's low gas exploration investment, including difficulties with the approvals processes, legal challenges and market interventions that may lead international companies to focus on lower cost and lower risk fields in other jurisdictions. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Find out more
News

Japan’s FEPC calls for clearer nuclear policy stance


20/05/24
News
20/05/24

Japan’s FEPC calls for clearer nuclear policy stance

Osaka, 20 May (Argus) — Japan's Federation of Electric Power Companies (FEPC) has called for a clarification of the country's nuclear power policy, to ensure stable electricity supply and alignment with its net zero emissions goal. The call comes as the government reviews its basic energy policy , which was formulated in 2021 and calls for the reduction of dependence on nuclear reactors as much as possible. But Japan's guidelines for green transformation, which was agreed in February 2023, states that Japan should make the most of existing nuclear reactors. Tokyo should clearly state in its new energy policy that it is necessary to not only restart existing nuclear reactors, but also build new reactors, said FEPC chairman Kingo Hayashi on 17 May. Hayashi is also the president of utility Chubu Electric Power. Hayashi emphasised that to utilise reactors, it would be necessary to have discussions regarding financial support, policy measures that would help ensure cost recovery, address back-end issues in the nuclear fuel cycle and conduct a review of nuclear damage compensation law. Japan's current basic energy policy is targeted for the April 2030-March 2031 fiscal year, when the country's greenhouse gas (GHG) emissions is forecast to fall by 46pc from 2013-14 levels. To achieve this, the power mix in the policy set the nuclear ratio at 20-22pc, as well as 36-38pc from renewables, 41pc from thermal fuels and 1pc from hydrogen and ammonia. Japan typically reviews the country's basic energy policy every three years. Nuclear, as well as renewables, would be necessary to reduce Japan's GHG emissions, although thermal power units would still play a key role in addressing power shortages. But Japan has faced challenges in restarting the country's reactors following safety concerns after the 2011 Fukushima nuclear disaster, with only 12 reactors currently operational. Japan's nuclear generation in 2023 totalled 77TWh, which accounted for just 9pc of total power output. Tokyo has made efforts to promote the use of reactors, after the current basic energy policy was introduced in 2021. The trade and industry ministry (Meti) has updated its nuclear policy, by allowing nuclear power operators to continue using reactors beyond their maximum lifespan of 60 years by excluding a safety scrutiny period in the wake of the 2011 Fukushima nuclear disaster. This could advance the discussion on Japan's nuclear stance, especially if the new basic energy policy includes more supportive regulations. The trade and industry ministry started discussions to review the energy policy on 15 May, aiming to revise it by the end of this fiscal year. It is still unclear what year it is targeting and what ratio will be set for each power source in the new policy. But the deliberation would form a key part of efforts to update the GHG emissions reduction goal, ahead of the submission of the country's new nationally determined contribution in 2025, with a timeframe for implementation until 2035. By Motoko Hasegawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Brazil's Rio Grande do Sul reallocates gas supply


17/05/24
News
17/05/24

Brazil's Rio Grande do Sul reallocates gas supply

Sao Paulo, 17 May (Argus) — Natural gas supply in Brazil's Rio Grande do Sul had to be redistributed because of the historic floods in the state, with diesel potentially making its way back as an power plant fuel to leave more gas available for LPG production. Gasbol, the natural gas transportation pipeline that supplies Brazil's south, does not have capacity to meet demand from the 201,000 b/d Alberto Pasqualini refinery (Refap), state-controlled Petrobras' Canoas thermal power plant and natural gas distributors in the region, according to Petrobras' then-chief executive Jean Paul Prates said earlier this week. The Santa Catarina state gas distributor has adjusted its own local network to meet peak demand in neighboring Rio Grande do Sul via the pipeline transportation network. The Canoas thermal plant is running at its minimum generation at 150GW, with 61pc coming from its gas turbine. The plant was brought on line to reinstate proper power supply after transmission lines in the south were affected by the floods. Petrobras plans to use a diesel engine to increase power generation. The current approved fuel cost (CVU) for diesel in the Canoas plant is of R1,115.29/MWh. Petrobras is also operating Refap at 59pc of its maximum installed capacity, at 119,506 b/d. Heavy showers in Rio Grande do Sul since 29 April brought unprecedented flooding to the state, causing a humanitarian crisis and infrastructure damage. The extreme weather has left 154 people dead, 98 missing and over 540,000 people displaced, according to the state's civil defense. By Rebecca Gompertz Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Japan’s Jera to handle 35mn t/yr LNG until FY2035-36


17/05/24
News
17/05/24

Japan’s Jera to handle 35mn t/yr LNG until FY2035-36

Osaka, 17 May (Argus) — Japan's largest LNG importer Jera plans to maintain its LNG handling volumes at no less than 35mn t/yr until the April 2035-March 2036 fiscal year. Rising renewable power supplies and the possible return of more nuclear reactors are likely to pressure LNG demand from Japan's power sector. Jera consumed 23mn t of LNG in 2023-24, down by 3pc on the year, although it handled 35mn t through its global operations during the same year. But Jera needs to secure sufficient LNG supplies to adjust for imbalances in electricity supplies and ensure power security, through more flexible operations. It is also looking to further promote LNG along with renewable electricity in Asian countries, while helping to reduce their dependence on coal- and oil-fired power generators. The 2035 target for LNG is part of Jera's three pillars of strategic focus, along with renewables as well as hydrogen and ammonia , which was announced on 16 May to spur decarbonisation towards its 2050 net zero emissions goal. The company plans to invest ¥5 trillion ($32bn) for these three areas over 2024-36. Jera also aims to retire all supercritical or less efficient coal-fired units by 2030-31 . This would help achieve the company's target of cutting CO2 emissions from its domestic business by at least 60pc against 2013-14 levels by 2035-36. By Motoko Hasegawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Chinese importers seek five LNG cargoes for Jun-Sep


15/05/24
News
15/05/24

Chinese importers seek five LNG cargoes for Jun-Sep

Shanghai, 15 May (Argus) — Five Chinese importers, mostly second-tier buyers, are each seeking one LNG cargo for June-September delivery, according to an official notice published by China's national pipeline operator PipeChina on 15 May. The five importers are PipeChina, Chinese independent ENN, Hong Kong-listed city gas firm China Resources Gas, Hong Kong-based Towngas and state-owned China Gas. PipeChina and ENN have indicated a target price of at most $9.50/mn Btu for their intended cargoes, both for delivery to PipeChina's 6mn t/yr Tianjin terminal. China Gas has indicated a target price of at most $9.30/mn Btu for delivery to PipeChina's 6mn t/yr Beihai termial. China Resources Gas and Towngas have both indicated a target price of at most $9/mn Btu for delivery to PipeChina's 2mn t/yr Yuedong and Tianjin terminals, respectively. This consolidated requirement came about because of a need for PipeChina to better leverage on its infrastructure advantages and, at the same time, meet the varying needs of gas importers and consumers in the country. But this requirement comes at a time when spot LNG prices are still somewhat higher than the importers' targeted prices. But the importers can choose not to buy if offers are not within their expectations. The front-half month of the ANEA, the Argus assessment for spot LNG deliveries to northeast Asia, was last assessed at $10.485/mn Btu on 15 May. Chinese importers mostly perceive spot prices below $9-9.50/mn Btu for June-September deliveries to be unattainable for now because there is strong buying interest from south and southeast Asia in particular. Indian state-controlled refiner IOC most recently bought LNG for delivery between 22 May and 15 June at around $10.60/mn Btu, through a tender that closed on 14 May. Thailand's state-controlled PTT most recently bought three deliveries for 9-10 July, 16-17 July and 22-23 July through a tender that closed on 13 May , at just slightly above $10.50/mn Btu. The most recent spot transaction was Japanese utility Tohoku Electric's purchase of a 10-30 June delivery at around $10.55/mn Btu through a tender that closed on 14 May . This is at least $1/mn Btu higher than Chinese importers' indications. Summer requirements have so far been muted but concerns among buyers about potential supply disruptions remain. Malaysia's 30mn t/yr Bintulu LNG export terminal suffered a power loss on 10 May, but this issue may have been resolved as of early on 15 May, according to offtakers. Some unspecified upstream issues may still be affecting production at the Bintulu facility, resulting in Malaysia's state-owned Petronas having to ask some of its buyers for cargo deferments, according to offtakers. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more