Gazprom resumes gas auctions with first quarter GASPOOL contracts

Source: Heren

2018/11/28

LONDON (ICIS)--Russian natural gas exporter Gazprom has resumed the auctioning of spot volumes to central Europe through its dedicated electronic sales platform (ESP) after a ten-day hiatus.

The sales resumed on Monday with the major European supplier only offering January ’19 delivery gas. On Tuesday and Wednesday, February ’19 volumes were also up for grabs.

Over the two days, 50 million cubic metres (mcm) of gas was sold, all for delivery into Germany’s GASPOOL hub.

ICIS assessment shows that February ’19 at GASPOOL had moved to a €0.237/MWh discount to the NCG on Tuesday, having been a touch higher than it at the end of last week.

After the auctions halted on 16 November a source at Gazprom told ICIS that further volumes for delivery during the back half of December would still be sold in 2018.

But while it was said that shorter-delivery products would soon be offered, the results of the latest auctions show that longer contracts are now being auctioned. On Tuesday and Wednesday the GASPOOL volumes were sold as a January-February ’19 bundle.

Spare spot volume

The industrial wind-down ahead of Christmas, which leads to a drop off in demand, could leave Gazprom with some length that it could sell through its platform.

Assuming it is priced competitively, this would allow shippers to snap up this gas and in turn hold back any of their own stored gas for the first quarter of 2019.

Christmas in Russia will be held on 7 January 2019 and this too will create a small demand fall domestically, which may allow Gazprom to export surplus gas to the central European markets as spot volumes.

Since Gazprom began auctioning via the ESP it has sold almost 1.1 billion cubic metres (bcm) of gas.

The Slovak and Austrian hubs have been key title transfer points in the auctions as have the two German hubs. Physical points also included Arnoldstein on the Italian-Austrian border; Baumgarten on the Slovak-Austrian border; and Waidhaus on the Czech-German border.

Overall exports

Data from Gazprom shows that so far in 2018 the company has physically exported into the European markets, including Turkish volumes delivered down the trans-Balkan Western Line, some 173.1bcm of gas.

Over the same period of time in 2017 the Russian company had delivered 170.9bcm.

While volumes delivered are up 1.3% year on year, fourth quarter flows to date – which is during the delivery period covered by the auctions – are down 5.8% at 29.4bcm.

If the 612mcm of October and November ESP sales are discounted, then year on year fourth-quarter flows to date would be 28.8bcm, having been 31.2bcm in 2017.

As this would effectively have been a year-on-year 7.7% drop in October and November flows, it is not surprising Gazprom sought to push more gas on to the market via spot sales.

The threat that LNG could eat into its market share will also have been a deciding factor in launching the ESP.