Gazprom sales prices tracking EU gas hub prices, new index shows

Author: Jennifer Sanin

2019/04/01

LONDON (ICIS)--Gazprom Export will release a weekly volume-weighted index of all its electronic sales as of week 14, the Russian supplier announced on Monday.

This will be the first time Gazprom releases public information on how much it has been charging companies for the gas it is selling via its electronic sales platform (ESP), although the price information will be reflective of all sales rather than individual desintations.

Each volume-weighted average comprises all the contracts sold for delivery within a said month to all nine available destination points. This includes all prompt and forward transactions.

The figure is final on the last day of each month, but a cumulative index will be updated on a weekly basis.

A rough comparison between Gazprom’s figures dating back to September 2018 and the benchmark TTF next-month indices, which do not include prompt transactions within the relevant month, shows that the ESP’s pricing mechanism largely follows European hub movements.

Gazprom’s prices fell below the TTF’s next-month index throughout the first quarter, as the inclusion of a plummeting prompt into the platform’s calculation will have weighed on its ultimate value.

April, meanwhile, has not yet traded on a prompt basis – Monday being the first session of the month – so its value on the ESP is likely to decline in coming sessions if the European Day-ahead continues to fall.

The ESP launched in September 2018 and has since ramped up sales, particularly to German virtual trading point (VTP) delivery points.

Since the platform began offering prompt contracts in mid-January, these have been occurring on a near-daily basis to the NCG, GASPOOL, Slovakian and Austrian VTPs, as well as the Austro-Italian Arnoldstein border point.

In March, there were 364 million cubic metres (mcm) of Russian gas auctioned on a day-ahead, weekend and balance-of-month basis to the aforementioned points. More than 278mcm of those went to Germany.

The Beregovo border point between Ukraine and Hungary was added in mid-February and shippers have purchased 99mcm for April delivery since then. The majority of those volumes, or 61mcm, were purchased between 18-21 March.

One trader active on the platform has told ICIS there are arbitrage opportunities for those who “consistently look at the prices and are sharp”.