RUSSIAN GAS FOR EUROPE DOWN

PLATTS - 04 Jul 2022 - Russian gas flows to Europe plummeted to new lows in June after Gazprom slashed supply via the Nord Stream pipeline and cut off more buyers over a ruble payment dispute, analysis of data from Platts Analytics showed July 4.

Russian pipeline exports to Europe in June via its main operational corridors -- Nord Stream, Ukraine and the TurkStream string to Europe -- totaled just 4.69 Bcm, down 41% compared with supplies of 7.93 Bcm in May, the data showed.

Russian gas deliveries to Europe fell sharply on June 16 when Gazprom cut supplies through Nord Stream to just 40% of capacity, citing maintenance issues with a key compressor station.

The reduction has led to reduced flows to some of the EU's biggest buyers of Russian gas such as Germany's Uniper, Italy's Eni, and Austria's OMV.

Nord Stream is also set to close completely for its annual maintenance shutdown on July 11-21, with German officials warning that the pipeline may not return after the scheduled work.

Gazprom has also cut off supplies to a number of European buyers over their refusal to comply with Moscow's new ruble-based payment mechanism.

The first companies to lose access to Russian gas were Bulgaria's Bulgargaz and Poland's PGNiG on April 27, followed by Finland's Gasum on May 21.

Deliveries were also halted on May 31 to Dutch trader GasTerra and on June 1 to Denmark's Orsted and to Shell, whose contract was for Russian gas supply into Germany.

Concern on the European gas market over Russian deliveries has kept prices at sustained highs. The Dutch TTF front-month price was last assessed on July 1 at Eur145.83/MWh, up by 76% since the start of June and by 320% year on year, according to S&P Global Commodity Insights data.

Other routes

Russian flows via the Yamal-Europe route through Belarus into Poland remained at zero in June after sanctions were imposed by Moscow on the use of the pipeline in Poland and the cancellation by Warsaw of the intergovernmental agreement covering use of the route.

The end of transit via and supply to Poland means Russian gas reaches Europe now only through three main routes -- Nord Stream, the Ukraine corridor and TurkStream.

Russian gas supply via Ukraine remains low with deliveries into Slovakia at the key Velke Kapusany entry point averaging just 35 million cu m/d in June.

Flows via Ukraine were reduced in May after gas grid operator GTSOU declared force majeure on flows entering Ukraine at the Sokhranivka point on the border with Russia.

Flows into Sokhranivka before the force majeure declaration -- the first of its kind since Russia's invasion of Ukraine on Feb. 24 -- had been running at around 24 million cu m/d.

GTSOU said it no longer had operational control of the Ukrainian compressor station at Novopskov in an area of eastern Ukraine occupied by Russian troops, adding that gas was being taken out of the transit stream for supply to Russian-occupied areas.

Gazprom, however, said it did not see any justification for the declaration of force majeure, and said it saw no reason not to continue supplies as before via Sokhranivka. It also turned down a GTSOU offer to re-route flows via the Sudzha entry point.

TurkStream work

The other main route for Russian gas to Europe is TurkStream, which saw deliveries in June drop to just 0.58 Bcm due to planned annual maintenance work on the pipeline.

Flows were zero at the Strandzha entry point on the border between Turkey and Bulgaria over June 21-26, with deliveries resuming on June 27, a day earlier than scheduled.

Deliveries at Strandzha had already fallen to as low as 18 million cu m/d in May after Gazprom halted deliveries under its long-term contract with Bulgargaz.

Flows were back up at 34 million cu m/d at the end of June, but still down on supplies of up to 43 million cu m/d seen toward the end of 2021, S&P Global data showed.

Total gas deliveries into southeast Europe via TurkStream in 2021 amounted to 11.6 Bcm, or an average of 32 million cu m/d.

The start in January 2020 of the two-string pipeline triggered an unprecedented reshuffle in the way Russian gas reaches southeast Europe.

One of the 15.75 Bcm/year strings feeds directly into the Turkish market, replacing volumes previously delivered via Ukraine in the Trans-Balkan pipeline, for which data is not available, while the other 15.75 Bcm/year string enters Bulgaria at Strandzha.

Initially, gas mostly either stayed in Bulgaria or was transited to Greece and North Macedonia, with small volumes also moving into Romania.

However, since the start of 2021, Russian gas sent via TurkStream has also been transited on to both Bosnia and Herzegovina, and Serbia, with Hungary also supplied via the new route since last October.

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