W Siberian fire hits Gazprom's earnings: VTB

An August 5 fire – which was extinguished the following day – at Gazprom's gas condensate treatment plant in west Siberia could mean a 3mn metric tons/yr drop in condensate sale volumes this year and next, according to Russian bank VTB analysts August 9.

But hydrocarbon production at the Yamburg, Zapolyarnoye and some other major fields continued and the bank is confident that the "widely diversified resource base and pipeline system will help Gazprom to restore its gas exports quite quickly (within several days)." It could do this also by slowing down its injections into underground storage and/or booking more transit capacity through Ukraine, VTB said.

Following the fire, Gazprom temporarily halted its supplies to the Urengoi facility and to the downstream Surgut gas condensate stabilisation plant. Gazprom also lowered its hourly gas supplies through the Yamal-Europe export pipeline by half, from 2.1mn m³ to 1mn m³, but brought them back to 1.5mn m³ within one day, VTB said.

"All in all, the financial impact from the accident is to come from the under-received condensate revenues, which we estimate at -2.2% and -2.6% of Ebitda for 2021 and 2022. We do not think that the accident is going to affect Gazprom's dividends distribution," it said.

So far this year Gazprom has stuck to flowing gas according to its minimum transit contract with Ukraine, which was agreed in the closing hours of 2019. European spot prices, already very high this year, rose again late last week following the news, according to a trading source. But the underlying narrative of under-stocked storage in Europe and very few LNG cargos remain the main factors in the upward price changes, the trader said.

Gazprom did not issue a statement on its website in Russian or English. Its most recent release was its August 4 announcement that it is now a St Petersburg-registered company. CEO Alexei Miller began his professional life in the city,