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Gazprom cuts 2012 gas exports plans to Europe-sources

10 February 2012 12:15 (UTC +04:00)

Baku â€“ APA-Economics. Gazprom told analysts it cut back on plans to boost exports to Europe this year, but analysts said the company would still be able to supply more than enough even though European customers were pleading for extra gas to cope with a cold snap, Reuters reported.

Gazprom, which covers quarter of Europe’s gas needs or more, cut its forecast for supplies to Europe by around 6 percent to 154 bcm, sources who saw a company presentation said on Friday.

Last year it supplied 150 bcm, also slightly less than expected.

Citi analysts said in a report this week that they expected Gazprom to deliver 145 bcm this year.

"In spite of this late season cold snap, we think an adjustment period will be needed to deal with the overall weather-depressed demand of the 2011/12 winter," Citi said.

"European storage is still quite full for this time of year, having not been drawn down as expected, so the need for gas to refill storage this summer will probably be less than usual."

Earlier Gazprom had expected to supply additional 10 to 12 bcm of gas to Europe in 2012 to around 164 bcm comparing to 150 bcm in 2011.

The company said on Friday, according to sources who attended the presentation, that it may boost be able to boost exports by pumping more Central Asian gas, increasing its purchases by 15 percent to 31.5 bcm in 2012.

European companies have complained that Gazprom has not met their requests for boosting deliveries of gas amid the ongoing cold snap. Gazprom said it has been unable to meet all the additional requests.

Last week, the head of Gazprom’s export arm Alexander Medvedev said the company was pumping gas to Europe at a rate equivalent to 180 bcm per year.

Some analysts have said that Gazprom could not meet rising demand for in Europe because it had decided to cut back on a programme to expand storage, and also suffered some bottlenecks on the path of Russian gas to Europe.

European exports are likely to be largely unchanged despite efforts to increase export capacity by building direct, underwater, links to Europe in order to bypass transit countries such as Ukraine.

In November, Russia commissioned Nord Stream pipeline on the bed of the Baltic Sea, with the first stage annual capacity of 27.5 bcm. The capacity is expected to double by the year-end when the second stage is expected to be launched.

Moscow is also mulling another underwater project, South Stream, which is designed to carry around 63 bcm of gas a year via the Black Sea starting from 2015.

But Gazprom also faces constrained demand for expensive Russian gas, which it expects to cost $415 per 1,000 cubic metres this year, up from around $384 in 2011 sources said. At the same time, it must compete with liquefied natural gas, spot market and unconventional gas.