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Russia’s Gazprom can set new natural gas export record at nearly 200 Bcm in 2018: CEO

Russian gas giant Gazprom can set a new historical gas export record of nearly 200 Bcm in 2018, up nearly 3% on the year, as demand in Europe continues rising amid declining production in the region, the company’s CEO Alexei Miller said Friday.

The company has already grown its deliveries to Europe and Turkey by 5.7% on the year to 101.2 Bcm in the first six months of the year, he told Gazprom’s general shareholders meeting.

“If the trend continues, our exports to the far abroad as a result of 2018 can enter a new historical record, of about 200 Bcm,” Miller said.

Gazprom’s Deputy CEO, Alexander Medvedev, went further, saying the company’s gas exports will exceed the 200 Bcm mark this year, and in the following years.

“I believe there will be more than 200 Bcm. In the mid- and long-term, due to the factors … of growing demand and falling production [in Europe], Gazprom has great potential to increase its exports above these indicators,” he said.

Last year, Gazprom exported a record volume of 194.4 Bcm of gas to Europe and Turkey.

The company’s subsidiary Gazprom Export estimates gas deliveries to Europe and Turkey at the level of around 195-200 Bcm/year in the near future, company CEO Elena Burmistrova said in May.

As European gas consumption rose last year — by 4.9% on the year to 568.2 Bcm — so did Gazprom’s share in the region’s consumption, Miller said, adding it reached “record levels of 34.2%” last year, up from 33%.

“The key growth drivers were rising economic activity in the European countries and the trend for a decrease in European production formed in the past years. The resource base for European gas industry is narrowing,” Miller said, specifically noting falling output at Groningen field in the Netherlands.

Miller also dismissed LNG competition, including from the US, with Gazprom’s pipeline gas, saying, “The development of global LNG does not lead to radical changes in European gas balance.”

US LNG accounted for about 0.5% in European 2017 consumption, with less than 2 million mt delivered to European customers, “mainly those not receiving Russian gas,” he said. “US LNG deliveries are held back by the high costs of production cycles and transportation across the ocean.”

Meanwhile, Gazprom last year also delivered its first LNG to Spain, a new market for the company which it has no direct pipeline link with, Miller said.

Production beats forecast

Gazprom plans to also revise up its gas production plan by about 15 Bcm from a previously expected 474 Bcm this year, said Vitaly Markelov, deputy chairman of the company’s management committee.

“We are considering a production increase in 2018. Last year, the company produced 471 Bcm. Today we are moving ahead of the plan for 474 Bcm in production by about 15 Bcm. We see our plans will be corrected upwards based on the results of the first half of 2018,” he said.

The company produced more gas than expected in the first half of this year due to greater demand from Europe during cold winter and early spring.

“In the heating season of 2017-18, during heavy cold in Europe, Gazprom set 10 daily records in supplies to the far abroad,” Miller said. In March 2018 alone, the company set an absolute record of 17.4 million cu m/day of gas supplies to the region, he added.
Source: Platts

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