RUSSIA'S GAZPROM EXPORTS UNCHANGED

PLATTS - 14 Jul 2020 - Russia's Gazprom has left its guidance for gas exports to international markets unchanged, with supplies expected to total 166-167 Bcm in 2020, a senior company official said July 14.

Andrei Zotov, department head at Gazprom Export, told analysts on a conference call that the company's expectations for its realized European gas price for the year were also unchanged.

"On volumes, we do not see any need to adjust our guidance downward and our previous guidance currently stands," Zotov said.

In April, Alexander Ivannikov, the head of Gazprom's finance department, said sales were expected to be 166.6 Bcm in 2020.

The forecast is significantly lower than the realized exports in 2019 of 199.3 Bcm and reflects the extreme shift in European gas market dynamics since the turn of the year.

The 199.3 Bcm referred to Gazprom's gas sales in the Far Abroad -- Europe plus Turkey and China, but minus the countries of the former Soviet Union -- and the target given for 2020 covers the same parameters.

Should Gazprom's supplies come in at the expected volume, it would represent the company's lowest sales to the Far Abroad since 2015 when it recorded sales of 158.6 Bcm.

As recently as February, Gazprom said its ambition was to keep its sales in the Far Abroad at around the 200 Bcm/year mark through the 2020s.

Price level

In April, Gazprom said it was budgeting for an average realized European sales price in 2020 of $133/1,000 cu m -- which would mark a sharp fall from the average realized price of $211/1,000 cu m last year.

Zotov said again July 14 that Gazprom saw no need to update its guidance with sales prices set to improve in the fourth quarter of 2020.

"We have reason to believe that the [European] market has bottomed out already," Ivannikov said July 14.

In Q1, Gazprom saw its average realized price in Europe fall by 37% year on year, compared with a fall at European hubs of closer to 50%.

"This is thanks to the structure of our long-term contract portfolio," Ivannikov said.

Turkish deliveries

Zotov also said Gazprom expected its sales in Turkey to recover over the remainder of 2020.

He said that in the second quarter, Russian gas supplies to Turkey were deeply impacted by an influx of LNG into the Turkish market "at significantly lower prices" than under Gazprom's long-term contracts.

He said some LNG that was turned away from Asia due to force majeure declarations turned up in Turkey, impacting on Russian pipeline supply.

The 16 Bcm/year Blue Stream gas pipeline from Russia to Turkey was also on maintenance in mid-May for a week, with supplies thought not to have resumed through the link, according to an industry source.

But Zotov said Russian pipeline supplies to Turkey had recovered again in July.

"In Q3 the situation seems to have balanced out and we see some good offtake volumes in July," he said.

For 2020 as a whole, Zotov said sales to Turkey were expected to be flat on 2019.

Gazprom's sales in Turkey totalled 15.5 Bcm last year.

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