“The situation is catastrophic”: gas Prices in Europe fell below the point of profitability of “Gazprom”
The European gas market continues to roll down the ramp, updating historical lows against the background of the influx of LNG, the crowded stores and quarantine measures.
The largest gas hub of the EU – TTF in the Netherlands – the price of gas for delivery the next day fell to 53.7 us dollars per thousand cubic meters. This is 20% less than at the end of April, and three times below levels of a year ago.
Supply contracts at the end of the week fell even lower to $ 52 per thousand cubic meters. A little more expensive – 71 dollars per thousand cubic meters – gas costs at the Austrian hub Baumgarten, which is the largest distribution point for Russian supplies to Europe.
Spot gas prices on the European market for almost a month are below domestic in all regions, except for extractive industries – the Yamalo-Nenets and Khanty-Mansi Autonomous district, Komi Republic and the Tyumen and Kurgan region.
Moreover, the current prices significantly below the point of profitability of “Gazprom”, which only taxes and transportation of each thousand cubic meters of fuel “eat” at least $ 63, notes “Interfax”.
So, about a thousand rubles per thousand cubic meters ($14) is met, $ 27 – the cost of transport of Russia, at least $ 22 is transported to the EU via the cheapest route – the “Northern stream-1”.
If we consider production costs and export duties, the “Gazprom” needs the price is close to $ 100 per thousand cubic meters.
To reduce damages, “Gazprom” sells a supply with a big delay – in the summer, autumn and 2021, say experts of the SKOLKOVO energy Centre. However, you have to sacrifice volume for January-April shipments to Europe fell by 20%.
Result in the niche of “Gazprom” gradually takes LNG from the beginning of the year in GTS Europe has been set at 39.5 billion cubic meters of liquefied natural gas – 16% more than a year ago. Deliveries of Norwegian gas has remained virtually unchanged at 38 billion cubic meters against 40 billion a year earlier.
To raise prices above the 100-dollar threshold, “Gazprom” has failed: in April the average sale price on the electronic trading platform (ETP) was 97 dollars per thousand cubic meters.
The situation on the gas market “remains catastrophic,” write analysts at PSB. On April 28, underground gas storage in Europe was 66 billion cubic meters, which is 15 billion cubic meters, or 29% above last year’s level.
“Against the backdrop of weak demand and filled storage recovery in the pricing environment is expected not earlier than next year”, – warn in PSB.
According to own forecast of “Gazprom”, this year’s gas sales to Europe will fall by 17% to 165 billion cubic meters, and the average price will crash by a third to 133 dollars. Thus Gazprom could lose up to $ 20 billion in export earnings, estimates Raiffeisenbank.
It will hit the company’s budget, which is loaded with a multi-billion megastrike and last year received the cash gap 190 billion rubles. In 2020, Gazprom will have to borrow up to $ 10 billion to balance the negative cash flow, predicts Fitch.
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