Gazprom sets records: less gas – more money

MOSCOW, September 1 — PRIME, Andrey Karabyants. Against the backdrop of a reduction in the volume of Russian gas pumped to Europe, Gazprom expects growth in financial performance and promises record dividends. Meanwhile, the European authorities are preparing for the worst-case scenario – a complete cessation of supplies from Russia.

Nord Stream rocked the European gas market

FEARS AND REALITY

The Nord Stream gas pipeline was stopped for maintenance – only for three days, and Gazprom warned about this in advance. It is expected that the necessary work will be completed on September 2, but the news caused another rise in gas prices.

Gazprom has already twice this year reduced supplies via Nord Stream for “technical reasons” – in June it reduced to 40% and in July to 20% of the installed capacity of the gas pipeline. The current complete shutdown of pumping, according to company officials, is due to the need for maintenance of the last gas pumping unit.

European sanctions brought the Nord Stream to a complete stop, according to Dmitry Peskov, press secretary of the President of Russia. He emphasized that Gazprom and the Russian side remain committed to their contractual obligations, but now they cannot be fulfilled due to restrictions and sanctions imposed by the EU, the UK and other countries.

Stopping the Nord Stream will aggravate the situation on the European market and lead to a further rise in the price of gas, the price of which has increased by more than 400% over the past year. Following gas in Europe, electricity is rapidly rising in price. Norwegian consulting company Rystad Energy reported that in August the average price of electricity in Europe rose to a record level, exceeding 500 euros/MWh. The wholesale price of electricity for next year’s delivery in France and Germany exceeded 1,000 euros/MWh.

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The ever-increasing prices of gas and electricity have led to a decline in the standard of living of many Europeans. Individual governments intend to spend billions of euros on subsidies for the population in the coming winter.

At the same time, Europe fears that Moscow may extend the repair of the pipeline for an indefinite period in retaliation for the sanctions imposed by the collective West against Russia after the start of a special operation to denazify Ukraine.

“Given the events of recent months, we think that market participants are no longer reacting to Gazprom’s statements and are preparing for the fact that the gas pipeline will not resume operation at all or, which is unlikely, its launch will be delayed for any reason,” the agency quotes. Reuters statement by Biraj Borharia, assistant director of European market research at Royal Bank of Canada.

RUSSIAN GAS IN EUROPE WILL BE LESS

After the introduction by the collective West of sanctions against Moscow, including the “freezing of Russian assets” in the amount of over $300 billion, Russia completely stopped gas supplies to Bulgaria, Denmark, Finland, and the Netherlands. These countries refused to make payments for gas supplies in rubles according to the scheme proposed by Moscow. Deliveries to other countries have also been significantly reduced, including to Germany, which is the largest buyer of Russian gas in Europe.

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Due to the reduction in supplies of cheap Russian gas, the German company Uniper was on the verge of bankruptcy and was forced to turn to the government for financial assistance. According to European media reports, Uniper will need more than 15 billion euros to prevent bankruptcy.

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Despite reduced supplies from Russia and sky-high gas prices, Germany continues to stockpile reserves in underground storage. According to reports from Berlin, by August 31, the country’s underground storage facilities were 83.3% full. According to government plans, the storage facilities should be 85% full by October 1 and 95% by November 1. Berlin is sure that the presence of such reserves will allow the heating season to pass and prevent a further increase in gas prices.

The German regulator, the Federal Grid Agency, said in an official statement that gas from underground storage facilities will not be used during the Nord Stream shutdown to compensate for reduced supplies from Russia. Thus, consumers will have to temporarily give up gas or buy it on the spot market at exorbitant prices.

On the day of the shutdown of the Nord Stream gas pipeline, the Italian Eni reported that Gazprom had reduced natural gas supplies from 27 million cubic meters. m/day up to 20 million cubic meters m/day This is the second reduction in supplies in the last two months. At the end of July, the Russian company reduced supplies from 34 million cubic meters. m/day up to 27 million cubic meters m/day

A day earlier, Gazprom notified the French company Engie that gas supplies would be cut from September 1 due to disagreements over payments. The Russian company claims that Engie did not pay in full for the gas delivered in July.

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In this regard, French Energy Minister Agnès Pannier-Runachet announced the need to prepare for the worst-case scenario – a complete cessation of gas supplies from Russia.

BETTER LESS BUT MORE EXPENSIVE

During a meeting dedicated to the Oil and Gas Industry Workers’ Day, Alexei Miller, the head of Gazprom, said that gas demand in the EU countries fell by almost 30 billion cubic meters over the first 8 months of this year. m, and worldwide – by 40 billion cubic meters. m.

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According to Miller, from the beginning of the year until the end of August, Gazprom produced 288.1 billion cubic meters. m of gas. Of this volume, 154.7 billion cubic meters. m delivered to the domestic market of Russia, 82.2 billion cubic meters. m exported to far-abroad countries.

The company’s financial performance this year will be significantly higher than last year, despite the reduction in supplies abroad, the head of Gazprom is sure.

“Despite the decline in gas supplies to foreign markets…, our calculations absolutely clearly show that the financial results of the Gazprom company, our revenue for 2022 will be significantly higher than in 2021,” Miller said.

He promised record dividends for the first half of the year, as the results of Gazprom’s work in January-June 2022 were “very, very, very good.”


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