Gazprom Offers Bullish Export Outlook
Russian gas giant Gazprom said February 26 that it plans to continue to raise its share of the EU and Chinese markets.
Gazprom said during a presentation in Hong Kong that it plans to spend RUB 1.3 trillion ($20.5bn) on building new export pipelines to Europe and China this year. A further RUB 1 trillion per year will be invested to 2035 in a bid to increase exports by up to 110bn m3/y.
The Power of Siberia pipeline, which will carry gas to China, should be completed in late-2019, the head of Gazprom’s future development department Oleg Aksyutin said, with 5bn m3 to flow via the route in 2020.
“Gazprom has built over 99% of the Power of Siberia gas pipeline. At the end of 2019, deliveries would start to China”, Gazprom Export’s general director Elena Burmistrova told investors.
Burmistrova said it is hoped that volumes on the route will expand to 38bn m3/y to help Gazprom secure a 13% stake in the Chinese market by 2035. BP forecasts Russian gas exports to China, including LNG, will rise to 69bn m3/y - or 12% of Chinese demand - by 2040.
The Russian company also hopes exports to the EU will rise significantly in the next 15 years, with the Turkish Stream and Nord Stream 2 routes set to boost exports, as well as replacing new transit routes with Ukraine. The officials were keen to sideline the threat of EU regulations and growing competition.
The International Energy Agency and BP forecast EU gas production will halve by 2040, but LNG import is expected to increase from 62mn mt/y in 2017 to 135mn mt/y. At the same time, the Southern Gas Corridor is expected to deliver 10bn m3/y of Azeri gas by 2021, with volumes to quickly double.
However, Gazprom was keen to note its deliveries are also rising. “2018 deliveries to Europe (including Turkey and outside of former Soviet Union members) increased by 3.8% year-on-year to a record 201.8bn m3,” Aksyutin said. Gazprom’s share in European markets rose from 34.2% to 36.7% last year.
Russia sees no threat from LNG producers, including the US, on its EU markets, the official insisted. “Russian exports to Europe in 2018 were three times higher than the total LNG supply of all global producers to this market and 55 times more than American LNG supply,” he pointed out.
EU gas imports are expected to increase 85-130bn m3/yr by 2035, he added. Burmistrova said Gazprom’s pipe-gas export price to the EU increased by a 25% year-on-year to $245.5/”000 m3 in 2018.
She insisted Nord Stream 2, with 55bn m3/y capacity, will be launched as planned in the fourth quarter of 2019 to deliver gas directly to Germany through Baltic Sea. The export head said she does not expect planned amendments to the EU’s gas directive - which could be in place by June - to disturb the pipeline project.
The new rules, which will put the focus for regulation on Germany as the landfall member state, will only apply to a 20km stretch of the pipeline, she claimed.
Deputy chairman Andrei Kruglov said Gazprom expects gas exports to Europe, including Turkey, would increase by about 20% by 2025. He was also keen to tell investors that while sanctions and restrictions could damage Arctic and deep-water projects, they’re associated with less than 1% of Gazprom’s total production.