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Sep 29, 2021
Russian gas supply is unable to ease Europe's gas price surge this winter due to domestic and export pressure
With global gas markets, particularly in Europe, under intense pressure, observers are looking to Russia to again become the unlimited natural gas supplier of last resort. However, Russia faces its own natural gas supply, demand, and export pressures.
- Availability of Russian natural gas exports has been unusually
tight recently. Russian gas company Gazprom's typical summer
cushion of spare capacity has been significantly lower than normal
this year owing to high domestic storage refill requirements after
a cold winter.
- Yet, the call on Russian gas production remained lower than
Gazprom's maximum productive capacity through most of the summer.
Apart from August, when Gazprom may have been producing at maximum
available capacity after an accident at a gas condensate processing
plant, it does seem to have still held some spare capacity.
- Are the Russian gas supply constraints possible this coming
winter? This winter, Gazprom's spare productive capacity could fall
to low levels or even to zero, depending on weather, raising the
prospect of an unusual "involuntary" upstream constraint on Russian
piped gas exports.
- Gazprom has supplied its export contractual volumes, but no more. Although Gazprom appears to have met all its contractual commitments throughout 2021, it has not taken advantage of high prices to sell additional gas (for instance, through auctions on its Electronic Sales Platform [ESP]), nor has it been refilling its storage capacity within the European Union.
Gazprom's projected supply and demand balance in December 2021
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This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.
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