On the agenda: Gazprom to auction gas for winter delivery in Europe

30 August 2016 16:33 Source:ICIS

European gas traders are gearing up for Russian natural gas producer Gazprom’s third auction for gas delivery to Europe which will be taking place on Wednesday, Thursday and Friday.

Gas offered at the auction will be delivered at various points in central Europe over the upcoming winter.

The transfer of gas will take place at Germany’s Greifswald entry point, the GASPOOL virtual hub and the Olbernhau border point with the Czech Republic. These are the same delivery points that were used in Gazprom’s first auction held in September 2015.

Gazprom will also deliver gas to the Baumgarten border point between Austria and Slovakia, as well as the Arnoldstein network point on the Austrian-Italian border.

Unlike the previous two auctions, the supplier did not reveal the amount of gas it would offer. Gazprom failed to sell all gas offered in both previous actions.

In its first auction, which was similar to this week’s upcoming event, Gazprom offered 3.24 billion cubic metres (bcm) and sold just under one third of that volume.

In an auction for gas delivery to the Baltic States held earlier this year, 75% of the 560 million cubic metres (mcm) of gas offered was sold.

In both cases, traders said the main reason for the relatively low sales was a higher price than expected. Gazprom said after its first auction that the price of the auctioned gas was above that in its long-term supply agreements.

Results of the auction will be announced after it ends on 2 September, a spokeswoman at Gazprom Export said.

Last year, major companies participated in the auction, including German and French utilities E.ON and ENGIE, Russian producer Novatek, US investment bank Goldman Sachs and Swiss-based commodity traders Vitol, Gunvor and Glencore.

When asked if they would take part in this year’s auction, Vitol and Gunvor would not comment on their trading activity. Other companies did not reply to a request to comment on the matter.

Gazprom on several occasions has denied that it aimed to make the gas auctions a full alternative to its oil-indexed long-term agreements, a hallmark of its business model. It has, however, said that up to 10% of its gas may be sold via auctions.

Earlier this year, the Russian major also renegotiated delivery contracts with some major European buyers, including E.ON and ENGIE, changing oil-indexed natural gas prices to hub-indexed ones. ekaterina.kravtsova@icis.com

By Ekaterina Kravtsova