Russian Gas Supply To EU Drops 6.5% In January

Russian pipeline and LNG gas supplies to Europe declined by 6.5% month on month to 4.86bcm in January, according to Montel estimates partially due to consumers favouring more competitive stock withdrawals.

Russia exported an estimated 2.66bcm of gas via two remaining pipeline routes to Europe, a monthly decline of 0.14bcm, or 5%, showed data published by European gas TSO group Entsog.

LNG Shipments To Europe

LNG shipments from Russia to Europe were down 8.3% to 2.2bcm, according to provisional data from Kpler. Of total, France was the largest importer of LNG, with deliveries accounting for 45% of all Russian supply, or 1bcm. Spain was the second-largest importer, with shipments making up 31% of the January total, or 0.69bcm.

Although Europe imposed bans on Russian oil and coal imports in the wake of the country’s invasion of Ukraine in February 2022, it continues to allow gas into the region, albeit with the aim of phasing out all such imports by 2027. Prior to the war, the region sourced some 40% of its gas from Russia.

Increased Draw On Storage

Yuriy Onyshkiv, a Kyiv-based gas market analyst at LSEG, said the decline in flows could have reflected increased storage withdrawals in central and southern Europe for countries such as the Czech Republic, Bulgaria and Austria where demand was on the rise.

He noted that the cost of gas from storage was likely to have been cheaper than imported Russian gas for many customers, with only Slovakia showing a reduction in storage withdrawals. “But this was because their exports to the Czech Republic fell amid unfavourable price spreads, meaning more gas stayed in the country to satisfy the local demand,” he said.

Europe-wide gas storage levels had reached 70% of capacity by the end of January, down from 86% at the beginning, according to Gas Infrastructure data.

Ukraine Transit Extension

Some of Russia’s gas to Europe still flows through Ukraine despite the war, although a five-year transit agreement will expire at the end of 2024. Russia’s Gazprom is unlikely to renew the deal but may still be able to book capacity through regular actions, Montel reported. But the CEO of one key end user, Austrian energy company OMV, said this week the firm had already secured enough supply to cover demand, even in the event of a complete half to Russian transit flows via Ukraine.

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