Gazprom increases exports

The past few months have become very successful for Gazprom in terms of exports. The concern raised gas exports in April by 20.5% against the same period last year; in the first ten days of May daily deliveries of gas to countries outside the CIS added 27.8% to last year’s result in the same period. Gazprom exports are currently equal to the volume supplied in the winter period – the heating season.

By the end of this year Gazprom expects its exports to Europe to reach 151.5bn cu m compared to 139bn cu m in 2010 - excellent parameters for a post-crisis year. Gas prices on long-term contracts are to rise to $500 per 1,000 cu m.

Stabilization of a political situation in the Middle East may theoretically create problems for the Russian gas giant; in this case the trend of growing LNG supplies to the EU will continue leading to decline in spot prices. Thus, Gazprom will either have to agree to new price concessions to its European partners or lose part of the market. But in reality there are no long-term guarantees of advance in LNG deliveries from the Middle East or their preservation even at the current level. The Islamic world is entering a long-term period of political chaos with possible numerous civil and interstate wars in the region. It would be very irrational for the EU to count on increase in the use of “Islamic natural gas” under such conditions.

By Stanistav Mitrakhovich, NESF leading expert