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Gazprom Export Rebound Delayed by Weather, Norway, RenCap Says

January 26, 2012

Jan. 26 (Bloomberg) -- OAO Gazprom’s natural-gas exports to Europe may show no growth this year with the outlook for the warmest winter since 2006 and Norwegian supplies curbing demand for Russian fuel, Renaissance Capital said today.

The gas export monopoly may supply about 150 billion cubic meters to Europe this year, unchanged from last year, analysts Ilya Balabanovsky, Ildar Davletshin and Artem Kvas, said in a note today. The Moscow-based investment bank previously expected Gazprom to ship 160 billion cubic meters after some liquefied natural gas cargoes were diverted to Asia.

“Following a detailed analysis of European natural-gas market trends with respect to LNG, weather patterns and indigenous production, we are taking a more bearish view of the company’s gas exports to the continent,” the analysts said. “The recovery in Gazprom’s exports is not dead, it has simply been delayed by a year, to 2013.”

Gazprom, which supplies about a quarter of Europe’s gas, expected production to reach pre-crisis levels this year, rather than 2013, Chief Executive Officer Alexei Miller said in June. In a bid to maintain its market share, the gas producer agreed to provide discounts to some European customers including GDF Suez SA, after oil-linked prices in its long-term contracts diverted from the continent’s spot rates.

Europe’s heating needs are diminished by the mildest winter weather since 2006 and in the absence of economic growth, leaving the continent’s gas consumption at 452 billion cubic meters this year, Renaissance said.

‘Last Resort’

A slower pace of gas withdrawal left inventories at about 12.3 billion cubic meters higher than normal levels, while about 17.7 billion cubic meters of LNG cargoes will be diverted to Asia this year, the analysts said. Norway’s Statoil SA will probably fill more of the 5.4 billion-cubic-meter gap than Gazprom, according to the research.

Statoil has benefited from changes in marketing and pricing strategy and higher production capacity in the North Sea, boosting its competitiveness against Gazprom, which remains as the “supplier of last resort” to European customers, Renaissance said.

--Editors: Torrey Clark, Tony Barrett

To contact the reporter on this story: Anna Shiryaevskaya in Moscow at

To contact the editor responsible for this story: Will Kennedy at

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