Gazprom retains plans to export gas to the far abroad in 2020 at the level 166-167 billion cubic meters at a price of $133 per 1 thousand cubic meters. The main bet the company is making on balancing market in the fourth quarter of 2020, now the market has passed the bottom point of its gas prices. According to analysts, the forward curve really points to a recovery in prices towards the end of the year, but export volumes will depend on competition from LNG suppliers, which can be exacerbated by the fourth quarter.”Gazprom” did not review the plans for exports and the average price of gas supplies to foreign countries in 2020, despite a sharp decline of these indicators in the first quarter. In April, the company’s management called a landmark in the export of 166.6 billion cubic meters and $133 per 1 thousand cubic meters.”Given the operational information in the first two quarters and sales estimates, we conclude that the need to adjust figures that have been presented both from the point of view of capacity prices, which are formed and expectations of the selections on our contracts,”— said the head of the Department of “Gazprom export” Andrey Zotov on a conference call for investors on July 14.In the first quarter “Gazprom” for the first time in 2015 showed a net loss of 116,2 billion rubles, while revenue due to lower prices of oil and gas fell by 24% to 1.7 trillion rubles. However, the monopoly expects that the current decline will be offset in the fourth quarter due to the balancing of the European market. “Speaking of spot prices at European hubs, there is reason to believe that today we have already passed the bottom point. More sustainable balancing market should be expected since the fourth quarter, due to the seasonal factor and high volume fill gas storages,”— said the head of financial-economic Department of “Gazprom” Alexander Ivannikov.According to him, for the first quarter of about 1 billion cubic meters of gas were delivered to China through the “Power of Siberia”. As for the drop in the level of gas supplies to Turkey, according to Mr Zotov, the situation with gas consumption in the country in the second quarter more difficult than the first because of the pandemic, and increased competition from LNG, the price of which is lower than contract gas. “All excess liquefied gas went from Asia to the European markets, including Turkey,” he explained. In may the supply of gas in the country decreased 4.6-fold, up to 195 million cubic meters. But Gazprom expects that by the end of the year will be on last year’s figures of shipments when the company set of 15.51 billion cubic meters.However, July is the traditional month of repair work on the pipelines, so to show June’s export performance will be difficult, he said. But, beginning in the fall, contracts of Gazprom with oil products bound will “reflect” the spring and the fall in oil ��of kotirovok that should have a positive impact on the gas, especially in such troubled market like Turkey. Sergey Kapitonov and indicates the direction of the forward curve, which confirms the expectations of “Gazprom” on restoration of prices: so, now in the British hub NBP futures contract for delivery in September traded at $2 per MBTU (about $70 per 1 thousand cubic meters), futures for the October — already at $2.5 per MBTU, Nov — $4 per MBTU, and $5 for MVTU (about $180 for 1 thousand cubic meters).A limiting factor for prices will become filled with storage as well as high competition, because with the growth of prices is expected to increase the activity of suppliers of LNG, in recent months reduced supplies to the European market. Don’t forget that “drive” export “Gazprom” will be able and these artificial instruments, as the repo transaction, when the liquidity of the group can sell gas in their UGS facilities to the traders in anticipation of the withdrawal season, reminds Sergey Kapitonov. Last year “Gazprom” in the framework of such transactions has sold more than 9 billion cubic meters of gas in European underground gas storage Gazprombank, until I bought the gas back, because it is not in demand.At the same time, it will be a drop of 17 compared with the 2019 year and the worst result 2015. Sergey Kapitonov also reminds us that a typical contract of “Gazprom” contains the position of the take-or-pay in the amount of 70-80%, or 145-165 billion cubic meters across the portfolio. “Therefore, the rating concern its ability to export can be supported by the fact that the decline below the declared level may result in problems with the implementation of some customers of their contractual obligations, particularly for Turkey,” he said.Tatiana Woodpecker
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