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Gazprom Export’s ESP gas sales surge to huge new high

Russian gas sales on Gazprom Export’s Electronic Sales Platform (ESP) surged to another new record high on Wednesday, with a colossal 406 million cu m sold in the latest auction.

It is the third fresh all-time high in a week following a first new daily record on July 4 (229 million cu m) and another on July 8 (355 million cu m).
The scale of the sales is unprecedented on the ESP, with volumes sold significantly higher than in any previous months.

Sales in the eight auctions so far in July are close to 1.7 Bcm, easily the highest level to date, and are bound to move higher with 15 daily auctions still to be held this month.

Sales in May saw the previous monthly high at 1.36 Bcm since the ESP was launched in September last year.

Average sales across the past five auctions are 302 million cu m/d — massively up on previous months — with June sales for example averaging just 64 million cu m/d.

PRICE RALLY
The significant ESP sales over the past five auctions come as European gas prices remain relatively elevated following a rally since the end of June.

The TTF front-month price has increased from just Eur9.10/MWh on June 28 to Eur12.28/Mwh on Wednesday, according to S&P Global Platts price assessments, an increase of 35%.

Given the price increase, Gazprom Export could be offering significantly higher volumes of gas on the ESP in a bid to cash in on the higher prices ahead of a possible price fall through the remainder of the summer.

The five-fold increase in sales could also be evidence Gazprom is continuing its market share strategy by offering large ESP volumes to offset potential down-nominations by long-term contract holders.

The record sales over the past week have been supported largely by significant volumes sold for delivery through the last five months of 2019 as opposed to short-term buying.

In Wednesday’s auction, sales included a massive 115 million cu m sold for delivery across Q4 to the German Gaspool hub. Quarterly sales are offered for delivery on a flat basis through the period.

It brings Q4 total sales to Gaspool to 302 million cu m, or an average of 3.3 million cu m/d.

There were also big sales on Wednesday for delivery in August and September across Germany (112 million cu m), Slovakia (43 million cu m) and Austria (43 million cu m).

BALANCE-OF-MONTH SALES
On top of sales further down the curve, there were two big July balance-of-month sales: a 46 million cu m sale for delivery to the Czech Republic at Olbernhau and a 23 million cu m sale for delivery to the Austrian virtual trading point.

Day-ahead sales were restricted to just 24 million cu m.

In all, gas sales on the ESP have now topped 9 Bcm since the first sale took place on September 20.

Gazprom Export has sold gas to more than 20 customers since it began the ESP auctions, including new clients that do not have long-term contracts with the Russian gas group.
Source: Platts

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